ANGLO AMERICAN PLATINUM LIMITED INTEGRATED REPORT 2018
UNLOCKING OUR FULL POTENTIAL 2018 REPORT INTEGRATED LIMITED PLATINUM AMERICAN ANGLO CONTENTS
OUR BUSINESS 1 Our approach to reporting PURPOSE: RE-IMAGINING 4 Group performance 5 Adding value MINING TO IMPROVE 6 Our business model 8 Global footprint and markets 10 Stakeholders PEOPLE’S LIVES 16 Our material issues BUSINESS CONTEXT AND STRATEGY 20 Our strategy – the next five years Unlocking our full potential 21 How we create value As unprecedented challenges in the global mining 23 Our approach to risk and opportunity management industry continue, Anglo American Platinum 32 Chairman’s letter 35 Chief executive officer’s review (Amplats) has proven its resilience and ability to PERFORMANCE REVIEW manage change with a focused strategy that is 40 Financial review unlocking our full potential and positioning our 56 Operations overview 56 Wholly owned group for a sustainable future. 58 Managed 66 Joint ventures and associates We are concentrating on elements within our 71 Process review 74 Pillars of value control and building the foundations for continuous 75 Socio-political (socio and relationship) improvement. Our strategic focus is on value. We 76 Safety and health (human) 76 People have therefore shaped our business to operate 77 Environment successfully in a fundamentally changed market – 78 Sustainability commitments 80 Key statistics driving the transformation that will make us more 86 Ore Reserves and Mineral Resources review robust, responsive and competitive. We have GOVERNANCE 92 Our board refined our portfolio by exiting certain assets and 94 Our executive committee focused on continuous improvement as well as 96 Corporate governance 104 Audit and risk committee report developing international markets for our products. 108 Social, ethics and transformation committee report Importantly, we are building strong relationships 112 Nomination committee report with all our stakeholders as our operations 114 Safety and sustainable development committee report concentrate on optimising their potential. 118 Remuneration report 138 Analysis of shareholders 139 Shareholders’ diary Refers to other pages in this report. APPENDICES 140 Administration SUPPORTING DOCUMENTATION ON THE WEBSITE SEPARATE DOCUMENT Full annual financial statements (AFS) Notice of annual general meeting 2018 Full ore reserves and mineral resources report Supplementary report GRI referenced index UN Global Compact Assessment King IVTM application register
www.angloamericanplatinum.com/investors/annual-reporting/2018 OUR APPROACH TO REPORTING
Amplats is a member of the Anglo American plc group, guided by the purpose and values of our parent while mindful of the complexities of our industry in developing our strategy. The synergies created by a common purpose, shared values and rigorous discipline underpin significant benefits for all stakeholders (page 15).
This report sets out our progress against strategic goals, with supplementary information on our website. For completeness, we discuss risks, opportunities and trade-offs between our capitals under each strategic element, as well as the relationships between external and internal factors that enable Amplats to create value. We detail our outlook, again considering the risks, opportunities and trade-offs, to give stakeholders a balanced view of our group and its prospects.
INTEGRATED REPORT REPORTING FRAMEWORK Our annual integrated report provides a holistic assessment •• International
Available in print and online as a pdf
ANNUAL FINANCIAL STATEMENTS REPORTING FRAMEWORK The audited annual financial statements present •• International Financial Reporting Standards (IFRS) statutory and regulatory information required by the •• Companies Act defined above company’s stock exchange listing. •• JSE Listings Requirements
ASSURANCE • The report of the external auditor on our financial statements is on page 4 of the AFS.
ORE RESERVES AND MINERAL REPORTING FRAMEWORK RESOURCES REPORT •• JSE Listings Requirements In accordance with the JSE Listings Requirement, •• SAMREC Code guidelines and definitions Amplats prepared its Mineral Resource (2016 edition). and Ore Reserve statements for all its operations with reference to the SAMREC Code guidelines and ASSURANCE definitions (2016 edition). Competent persons have In compliance with the three-year external review and been appointed to work on, and assume audit schedule: responsibility for, the Mineral Resource •• The Mineral Corporation conducted a detailed and Ore Reserve statements for all operations and numerical audit of the data gathering, data projects, as required. transformation and reporting of Mineral Resources and Ore Reserves for Unki Mine.
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Anglo American Platinum Limited Integrated Report 2018 1 OUR APPROACH TO REPORTING CONTINUED
This integrated report is one of our primary communications with stakeholders. While it is prepared mainly for providers of capital and shareholders, financial information is balanced with commentary on our most material sustainability issues for a holistic view of the company. This report covers the 12 months to 31 December 2018 and follows a similar report for the year to 31 December 2017.
REPORTING PRINCIPLES AND APPROACH Our integrated report is structured against the framework of the International Integrated Reporting Council (IIRC) and considers its guiding principles:
CONSISTENCY STRATEGIC FOCUS RELIABILITY AND CONNECTIVITY AND AND FUTURE ACCOUNTABILITY COMPLETENESS OF INFORMATION COMPARABILITY ORIENTATION Year-on-year comparisons Insight on how our strategy Our leaders are accountable Our chief executive This report is a holistic demonstrate progress influences our ability to for the company’s actions, officer provides view of Amplats, with towards our strategic goals. create value in the short, and are the custodians of assurance that this report financial, operational and medium and long term. our governance framework. includes all our material non-financial aspects. Our governance structures priorities in a balanced way, and key issues they dealt and without material error. with in 2018 are detailed from page 97.
This report includes disclosure on all entities in our consolidated in our integrated risk management process (page 23), or issues financial statements, but excludes non-financial data on our joint that are important to stakeholders (page 10). ventures. To identify as many relevant matters as possible, we took a For completeness, we also consider threats, opportunities and three-pronged approach: outcomes emanating from other entities or stakeholders with a •• Internal materiality review significant effect on our ability to create value. •• External materiality review We disclose our performance across all platinum group metals •• Materiality workshop. (PGMs, expressed as platinum, palladium, rhodium, gold, iridium and ruthenium metal-in-concentrate) to better reflect the basket of The prioritisation of our material issues was reviewed and metals we produce. confirmed first by the executive committee and then by the board. Our business model (page 6) illustrates how Amplats considers the REPORT CONTENT capitals – financial, manufactured, human, social and relationship, As noted, in 2018 we have elected to report against our strategic natural and intellectual – articulated by the IIRC in creating value, as progress, after significantly repositioning our business over the past well as the trade-offs. five years to establish the platform for sustainable growth in the next phase of our strategy. DETERMINING THE REPORTING BOUNDARY Our material issues (summarised from page 16) are woven into this In line with the IIRC framework, in determining the boundary, we narrative and defined as issues with the greatest real and potential work outward from the financial reporting entity, Amplats, to impact – both positive and negative – on achieving our business consider risks, opportunities and outcomes associated with other objectives. These may be related to our internal or external entities or stakeholders that have a significant effect on our ability to environments (page 9), significant risks and opportunities identified create value. This is illustrated on the next page.
Reporting boundary for the integrated report (risks, opportunities and outcomes)
Joint Subsidiaries Investments arrangements (other forms)
BUSINESS INVESTORS EMPLOYEES CUSTOMERS SUPPLIERS COMMUNITIES OTHERS PARTNERS
2 Anglo American Platinum Limited Integrated Report 2018 OUR BUSINESS
Sound corporate governance is a critical foundation for protecting The six capitals under the IIRC framework translate across our stakeholder value and achieving the group’s strategic growth pillars of value as follows: objectives. Our governance universe (below) illustrates how the pillars of value are governed via the four governance segments – AMPLATS PILLAR OF board, finance, risk and social and sustainable – in support of the IIRC CAPITAL VALUE Amplats strategy and purpose. The elements in each segment are governed with appropriate processes, systems and resources to Financial Financial, cost ensure we demonstrate the desired governance outcomes. Manufactured Production Human People, safety and health Social and relationship Socio-political Natural Environment Intellectual All pillars
Our pillars of value (below) are fundamental to how we manage all aspects of our business to achieve our strategy and purpose.
PILLARS OF VALUE GOVERNANCE UNIVERSE GOVERNANCE OUTCOMES
BOARD GOVERNANCE • Board structure • Board organisational • Memorandum of culture and ethics Incorporation and • Compliance with key FINANCIAL charters legislation • Board evaluation • Remuneration and • Succession planning reward and rotation • Key performance • Key policies indicators Ethical SAFETY AND HEALTH leadership SOCIAL AND FINANCIAL SUSTAINABLE GOVERNANCE ENVIRONMENT GOVERNANCE • Planning and Good Purpose, budget performance • Sustainability • Operational strategy performance SOCIO-POLITICAL • Social way and strategy and • Internal controls performance • Capital allocation • Safety and health values • Monitoring and • Environment evaluation Effective • Stakeholder • Funding structure PEOPLE engagement and • IT governance control communication • Taxation • Transformation • Outlook • Human resource PRODUCTION development Trust and legitimacy RISK GOVERNANCE • Risk management COST • Operational risk assurance • Internal audit
Governance elements of the business model and value-creation process
APPROVAL OF REPORT The board acknowledges its responsibility for ensuring the integrity of the integrated report, and has applied its collective mind to the preparation and presentation of this report. In our opinion, the 2018 integrated report is presented in accordance with the IIRC framework by addressing all material matters to offer a balanced view of our strategy and how it relates to Amplats’ ability to create value in the short, medium and long term.
Valli Moosa Chris Griffith Chairman Chief executive officer
FORWARD LOOKING STATEMENTS DISCLAIMER Certain elements in this integrated report constitute forward looking statements. These are typically identified by terminology such as ‘believes’, ‘expects’, ‘may’, ‘will’, ‘could’, ‘should’, ‘intends’, ‘estimates’, ‘plans’, ‘assumes’ and ‘anticipates’, or negative variations. Such forward looking statements are subject to a number of risks and uncertainties, many beyond the company’s control and all based on the company’s current beliefs and expectations about future events. Such statements could cause actual results and performance to differ materially from expected results or performance, expressed or implied. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the company and its subsidiaries.
Anglo American Platinum Limited Integrated Report 2018 3 PILLARS OF VALUE: FINANCIAL, COST, PRODUCTION
GROUP PERFORMANCE
SAFETY AND HEALTH PRODUCTION DO NO HARM TO OUR WORKFORCE SUSTAINABILITY PRODUCE VALUABLE PRODUCT 2 KPIs Fatalities Eliminate fatalities 5,187 KPIs (2017: 6) PGM M&C •• Equivalent refined production production (2017: 5,008) operational 3.0 improvement projects TRCFR Reduce total •• Sales volumes (2017: 4.5) recordable case frequency rate (TRCFR) PEOPLE CREATE A SUSTAINABLE COMPETITIVE ADVANTAGE SOCIO-POLITICAL THROUGH CAPABLE PEOPLE AND AN EFFECTIVE, PERFORMANCE-DRIVEN ORGANISATION PARTNER WITH LOCAL COMMUNITIES AND GOVERNMENT IN THE BENEFITS OF MINING 108 KPI KPIs Productivity PGM oz/employee 3.9 (2017: 94) Anglo American •• Corporate social social way investment (2017: 3.2) •• Socio-economic 6.28% development training and development of total payroll •• Enterprise and supplier development •• Strengthening stakeholder relationships COST •• Taxes and royalties to BE COMPETITIVE BY OPERATING AS government EFFICIENTLY AS POSSIBLE 2018 guidance 20,684 19,600 – 20,200 (2017: Unit cost 19,203) Unit cost R/Pt oz ENVIRONMENT MINIMISE OUR IMPACT ON THE ENVIRONMENT
0.79 KPIs FINANCIAL RETURNS SUSTAINABLE RETURNS TO SHAREHOLDERS Energy intensity Reduce (2017: 0.83) gigajoules/t milled 24 KPI Return on capital •• Commercial savings 0.96 KPIs employed (%) •• Operating profit (2017: 18) •• Achieving EPS Water intensity targets (2017: 1.08) Reduce m3/t milled
HOW WE ARE DOING
Inclusion in FTSE4Good Top 30 in JSE Top 2 mining company globally in ISS Oekom index since June 2015 Responsible Corporate Responsibility Review 2018 Investment index
4 Anglo American Platinum Limited Integrated Report 2018
oekom Corporate Responsibility Review 2018
The Materiality and Impact of Sustainability Research
1 ADDING VALUE OUR BUSINESS
2017 R million 2018 % Revised Value created 74,582 65,670 Net sales revenue 74,582 14 65,670 Value added by operations 29,063 40 20,785 Value distributed 30,014 33 22,646 Salaries, wages and other benefits 9,732 (4) 10,118 Skills development 104 28 81 Percentage of total payroll 1% 1% Taxation 4,876 12 4,344 Providers of capital 922 (25) 1,229 Minority shareholders as dividends 198 (27) 272 Dividends declared to shareholders*** 3,034 222 941 Total social investment* 609 40 436 Development programme** 35 100 – Environmental investment 68 (23) 89 Waste disposal, emissions treatment and remediation 20 (27) 27 Pollution and environmental management 49 (21) 62 Total value distributed 19,578 12 17,509 Reinvested in the group 10,436 103 5,137 Losses from investments net of interest received (951) (49) (1,861) 29,063 40 20,785 * Total social investment includes social and labour plans and corporate social investment expenditure of R264 million, payments into community trusts of R82 million and operations community expenses of R121 million and the dividends to communities of R142 million. Also including Unki CSI. ** Development programme comprising supplier, enterprise and youth development as well as loans disbursements to suppliers and entrepreneurs. The programme was developed in 2018, hence no figures for 2017. *** Interim 1,009 – *** Final 2,025 941
Our differentiated value proposition… enabled through delivery of our strategy over the past five years OUR DIFFERENTIATED VALUE PROPOSITION
QUALITY ASSETS AND CAPITAL DISCIPLINE AND LONG-TERM SUSTAINABILITY OPERATIONAL EXCELLENCE SHAREHOLDER RETURNS 70% production in H1 of primary Strong balance sheet and Project studies on value-add producer cost curve earnings growth optionality
Only open-pit PGM mine of scale Focused capital allocation Grow demand for PGMs in the world Long-life Mineral Resources Sustainable cash dividend Modernising mining through innovation
Progress on operational Industry leading returns Invest in people and improvement with significant communities potential still possible Refer to the strategy on page 20.
Anglo American Platinum Limited Integrated Report 2018 5 OUR BUSINESS MODEL
We have mapped the IIRC capitals that translate well into our pillars of value (page 22), and have elected to report against these pillars as underlying key performance indicators integral to our performance-based remuneration structure.
INPUTS per value pillar OUR BUSINESS
FINANCIAL Strategic outputs l Working capital •• Upgrading the portfolio l Debt capital –– Completed the sale of Union –– Completed the sell down of equity in Royal Bafokeng Platinum Exploration SAFETY AND HEALTH –– Completed the disposal of 33% stake l 70% of assets in the first half of l Substantive in BRPM JV PGM industry cost curve investment upward –– Completed the acquisition of l Mineral Resources inclusive of of a billion rand in remaining 50% stake in Ore Reserves (includes Zimbabwe) the areas of safety Mototolo JV 760.5 4E Moz and health. •• Launch of AP Ventures Fund, l Ore Reserves (includes with USD200m commitment Zimbabwe) 151.6 4E Moz together with the PIC ENVIRONMENT •• Continuing project studies l SO abatement 2 for value-enhancing investment R2.5bn expansion at Mogalakwena •• Well positioned for Marketing and market SOCIO-POLITICAL the next phase of Strategy l development 1. Extracting the full R609m on total value delivery social investment l Facilitate the development of potential from our community markets for our PGM product: operations development and – Jewellery 2. Investing in our social labour plans – Investments portfolio – Industrial 3. Facilitating the development of PGM demand PEOPLE l 24,789 highly skilled people Processing l Smelting – four smelters produce furnace matte for PRODUCTION conversion (ACP) l New operating l models, Refining – produce refined modernisation base metal and precious metal and mechanisation products
COST l Initiatives to manage impact of cost escalations
TRADE-OFFS Key enablers Zero harm, organisational culture, modernisation, innovation and community and stakeholder relationships underpin value-creation process
HEALTH AND SAFETY ENVIRONMENT SOCIO-POLITICAL The urgent need to entrench safe behaviour Offsetting our impacts through rehabilitation, Sentiment on mining has turned sharply negative in across operations has financial implications, but providing energy and water, and responsibly recent years. Restoring trust based on a common benefits employee well being and productivity sharing socio-economic benefits understanding of our challenges and purposes
6 Anglo American Platinum Limited Integrated Report 2018 OUR BUSINESS
OUTCOMES
FINANCIAL Outputs Cash flow from operations l Platinum R5.6bn 2.5Moz ROCE 24% l Palladium SAFETY AND HEALTH 1.6Moz Two fatalities 88% l Rhodium of employees know their HIV status 0.3Moz TRCFR improvement l Other PGMs of 34% 0.8Moz ENVIRONMENT l Base metals Energy and water intensity ▼ 7.9% and 9.6% Waste to landfill ▼ 38% GHG emission ▼ 11% Mining and concentrating l Four underground mines SOCIO-POLITICAL Social and labour plans l One open-pit mine on-track, progress l Chrome recovery plant on collaboration regional l Two joint ventures development
PEOPLE 6.28% of total payroll on training and development, attrition rate for critical and Output scarce roles at 8.69% 20MGJ Energy 24.4Mm3 PRODUCTION Water used Productivity By-products ▲ to 15% l 7.9kt Sodium sulphate Waste to land fill l Cobalt sulphate l Sulphuric acid 4.1kt COST C0 emission 2 Unit cost ▲ 8%
Key enablers Zero harm, organisational culture, modernisation, innovation and community and stakeholder relationships underpin value-creation process
PEOPLE OPERATIONS Incorporating the Mototolo workforce will We invest in technology to improve operational require short-term focus to integrate these efficiencies and reskill people for employees into our culture and processes modernised operations and purpose
Anglo American Platinum Limited Integrated Report 2018 7 PILLAR OF VALUE: PRODUCTION
GLOBAL FOOTPRINT AND MARKETS
Amplats is the leading primary producer of PGMs from resource to market and operates the best assets.
UNKI Key feature: Smelter commissioning began in Q3 2018 Key issue: Difficult local economic conditions, uncertain Harare government policy and indigenisation POLOKWANE SMELTER Key feature: Construction of the SO2 abatement plant began in August 2018 ZIMBABWE Key issue: Service-delivery capacity, land claims MOGALAKWENA Key feature: Record PGM and platinum production, both up 7% Key issue: High dependence on mining, capacity of local and provincial government Bushveld complex TWICKENHAM Pretoria Key feature: Mining footprint is being used to research new Johannesburg mining technology Key issue: Care and maintenance: unemployment, environmental issues, illegal mining AMANDELBULT Key feature: Strong cash flow from new chrome plant Key issue: Burden on mine due to high local unemployment SOUTH AFRICA PROCESS RUSTENBURG Key feature: End-of-campaign rebuild of Mortimer smelter and ACP phase A returned to service Key issue: Community demands for local procurement
MOTOTOLO/DER BROCHEN Key feature: Acquired Glencore’s interest in Mototolo Key issue: High poverty levels exacerbated by low skills We own and operate three mining complexes in South and education levels Africa’s Bushveld complex: Mogalakwena and Amandelbult, and now Mototolo Mine. We also operate the Unki Mine on Amplats is listed on the JSE Limited and headquartered the Great Dyke in Zimbabwe. We have interests in two joint in Johannesburg, South Africa. Our majority shareholder ventures (JVs): is Anglo American plc (79.9%). •• Modikwa Platinum Mine (50%), with African Rainbow Minerals We focus on extracting value from all the PGMs and Mining Consortium Limited base metals we mine – metals that make modern life •• A pooling-and-sharing agreement with Sibanye-Stillwater, possible in safe, smart and responsible ways. covering the shallow reserves of the Kroondal and Marikana mines (latter on care and maintenance). We concentrate on low-capex, high-return and fast- Our smelting and refining operations treat concentrates from our payback opportunities that enhance value. owned operations, as well as from our JVs and third parties.
Attractive growth options are available when the market Recent corporate action: We bought out minority shareholders demands the metal and our balance sheet allows. in Mototolo Platinum Mine, and sold our minority interest in BRPM. For more detail on our operations mineral resources and reserves The Twickenham project and Bokoni Platinum Mine (49% held) are see from page 86 of our full ore reserves and mineral resources on care and maintenance. report.
8 Anglo American Platinum Limited Integrated Report 2018 OUR BUSINESS
A detailed review of our markets is included in our supplementary report. Key features are summarised below.
PLATINUM
(000 oz) 2018 2017 Total primary supply 6,108 6,105 Demand 7,765 7,963 (Deficit)/surplus 523 179
PALLADIUM
(000 oz) 2018 2017 Total primary supply 6,880 6,361 Demand 9,623 9,568 (Deficit)/surplus (9) (788)
RHODIUM
(000 oz) 2018 2017 Total primary supply 759 759 Demand 1,012 1,050 (Deficit)/surplus 92 19
Platinum (net demand)1 Palladium (net demand)1 Rhodium (net demand)1
2% 19% 29% 25% I Jewellery I 43% Investment I Industrial I Other I Autocatalyst I I 1% Autocatalyst Autocatalyst I Industrial I Jewellery 75% 27% 79%
Medium-term demand outlook Medium-term demand outlook Medium-term demand outlook stable positive stable 1 Net demand, gross demand net of recycling.
DUE TO THE LONG-TERM NATURE OF THE BUSINESS WE CONSIDER VARIOUS PGM MARKET OUTCOMES IN SETTING, STRATEGY AND PLANNING, SUCH AS:
Faster adoption of battery Vehicle drivetrain Continued dominance of internal Fewer vehicles AUTOMOTIVE electric vehicles “Patchwork” combustion engines
China historical decline continues + China historical decline Producer-led market development efforts JEWELLERY India stagnates continues drive growth demand
Additional incremental demand INVESTMENT Limited net incremental investment demand supported by market development
Irrational response Rational response Supply restrictions SUPPLY projects progressed despite projects progressed when demand and rationalisation and consolidation weak fundamentals economics support plans progressed
Anglo American Platinum Limited Integrated Report 2018 9 PILLARS OF VALUE: SOCIO-POLITICAL, PEOPLE
STAKEHOLDERS
Stakeholder engagement is a crucial element to business longevity and Public Investment Corporation and Coronation), a customer and a overall success. Engaging with stakeholders can create positive impacts supplier of mining equipment) were interviewed. In addition, a for the company by strengthening relationships across the value chain. materiality workshop with a multidisciplinary team of internal and external stakeholders gave them the opportunity to add material Amplats engages continuously with stakeholders: host issues that were not identified through internal and external reviews. communities, communities in labour-sending areas, unions, Internal reviews included representatives from key departments – employees, investors, the media, government, non-governmental investor relations, strategy, human resources, supply chain organisations (NGOs), members of our supply chain and our joint management, corporate affairs, governance and assurance, and venture (JV) partners. corporate affairs. External reviews included representatives from Experience has shown that stakeholder engagement is most productive recognised unions, as well as the NGO, Action Aid. when a two-way exchange of information is encouraged. We focus on Engaging with regional partners is an ongoing process in our the concerns and opinions of our stakeholders and providing regional social economic development programme in Limpopo appropriate responses to support both our social capital and licence to (page 61 of supplementary report). This initiative draws on operate. Our approach is therefore based on being transparent and partnerships with other mining companies, research organisations, responding timeously and professionally to their concerns. philanthropic bodies, governmental agencies and local During the materiality process, a number of key stakeholders were communities to effect much-needed socio-economic development engaged to identify issues that they consider material to our ability in the province. to create value. Representatives from investors (Old Mutual Invest,
KEY ISSUES IN 2018 Strong relationships Cordial relationships Weak relationships
STAKEHOLDER AND LINK TO STRATEGY/ MATERIAL QUALITY OF ISSUE RELATIONSHIP* KEY ISSUES RESPONSE
Demand for compensation Agreement reached and compensation paid to affected for ploughing fields for the communities. Sekuruwe and Ga-Molekana communities Legitimacy of individuals or Amplats continues to engage with interested and affected groups that engage (or want parties, organised structures and individuals. Engaging with to engage) with Amplats on communities is critical as part of our social way and specific behalf of mining communities plans are in place. Working with municipalities to develop structures that would be widely accepted by communities and drive development in line with agreed plans. Relocation of the remaining In principle, agreement secured with communities on relocation 63 households in and the farm where the community will be relocated to has been Motlhothlo village close to secured, in consultation with affected households and their Mogalakwena Mine representatives. Terms of the agreement are being finalised with the community to amend the 2012 agreement. Community Invasion of Amplats’ land in the Amplats worked with the municipality and law-enforcement Paardekraal and Seraleng areas agencies to interdict and remove illegal occupants. We around Rustenburg process continue to work on a broad land strategy with all operations operations, as well as in and have finalised the agreement to donate 204ha of land to Mogalakwena Mine lease areas Rustenburg municipality. Grave relocation at Agreement reached with affected families; all compensated as Mareesburg tailings facilities per agreement. All graves successfully relocated with the support of the municipality and Department of Cooperative Governance and Traditional Affairs. Employment and Continued engagement with affected parties and contractors procurement opportunities to ensure local employment and procurement is prioritised demands around all and other jobs are created outside of mining to reduce operations dependency on the mine.
* For 2018, this is a subjective assessment. We are working on a more objective, quantifiable method.
10 Anglo American Platinum Limited Integrated Report 2018 OUR BUSINESS
Strong relationships Cordial relationships Weak relationships
STAKEHOLDER AND LINK TO STRATEGY/ MATERIAL QUALITY OF ISSUE RELATIONSHIP* KEY ISSUES RESPONSE
Premier Employment Growth Positive as Amplats CEO co-chairs with MEC of public works. Advisory Council Amplats CEO’s engagement Positive response from Minister Gwede Mantashe to Amplats with the Department of Mineral CEO on the company’s good record in employee safety and Resources (DMR) minister on health. Ministerial assurance that government will support the low commodity prices platinum coin project.
SO2 abatement As requested by exco, a communication and engagement strategy communications and has been developed to pursue settlement by directly engaging engagement strategy with the Department of Environmental Affairs (DEA) and suspending current legal challenges. Rather than focusing on the technicalities of interim levels and postponements, the strategy
positioned the announced R2.5 billion SO2 abatement project as a win-win for all parties and to initiate engagement with the DEA. As a result, our CEO met with the director general in June and agreed in principle to settle disputed matters through engagement, Government followed by two meetings between the respective legal teams. relations Government does not have Collaborating with Limpopo Department of Education and (national and maintenance plans for Social established quarterly engagement forum to monitor SLP provincial) and Labour Plans (SLP) projects that Amplats has handed over. projects handed over Solidifying relationship with Director general of DMR represented the minister at the regulator company’s Global Safety Day and congratulated Amplats on low fatalities. Anglo American South Africa’s AASA was part of the delegation of the Minerals Council SA (AASA) engagement with the that engaged with the minerals resource minister. DMR mining charter 18 Met the DMR and Department of Trade and Industry (DTI) (MC18) drafting team drafting teams to present alternative proposals on free carried interests in the ownership component of MC18. Amplats works with government to reduce the level of fatalities in the industry. Engaging with municipalities Ongoing engagement with municipalities where we operate to ensure alignment, collaboration and resolution of issues that affect service delivery. •• Rustenburg – finalise •• Planning committee established to facilitate land donation donation of land in Bokamoso •• Thabazimbi – implement community development initiatives •• Mogalakwena – finalise Motlhotlo resettlement action plan and township Government establishment where relations community will be resettled (municipal) •• Fetakgomo-Tubatse •• Engagement forum comprising senior officials of – relocate of Mareesburg Mogalakwena municipalities meets fortnightly to action graves relocation plan. Five graves successfully relocated with assistance from Limpopo Department of Cooperative Governance, Human Settlement and Traditional Affairs •• Polokwane – implement •• Strong relationship with mayor established community development initiatives * For 2018, this is a subjective assessment. We are working on a more objective, quantifiable method. Anglo American Platinum Limited Integrated Report 2018 11 PILLARS OF VALUE: SOCIO-POLITICAL, PEOPLE
STAKEHOLDERS CONTINUED
STAKEHOLDER AND LINK TO STRATEGY/ MATERIAL QUALITY OF ISSUE RELATIONSHIP* KEY ISSUES RESPONSE •• Disciplined capital •• Disciplined capital-allocation framework allocation •• Dividend reintroduced for 2H FY17, totalling R900 million •• Market supply and demand •• Improving shareholder returns •• Political and policy •• Appropriate market development under way to establish uncertainty in South Africa demand and alternate uses of PGMs Investors •• Consistent engagement with many levels and departments of government Amplats and unions steering We engage with regional union leadership and operational unit committee: partnership forums where key operational issues are •• Outlining business strategy discussed. •• Key decisions by the company •• Policies and procedures •• Dispute-resolution Employees processes •• Union specific issues affecting relations •• Relationship building Historical and current status Amplats has received a number of concerns about houses in at Motlhotlo Armoede, including one from a specific household. We commissioned an independent structural review to understand the extent of the problem, technical and causal elements (other than construction) and remedial actions required for affected households. The review ensured that the specific household cited is not dealt with in isolation. As part of the relocation agreement, relocated families are responsible for maintaining their properties. However, Amplats will help these households to fix identified issues. An internal process to appoint a contractor is under way. Modikwa employee bus The incident where a bus transporting Modikwa Mine incident employees was set alight is the subject of an ongoing criminal Media investigation. As a result, we are not able to comment on the matter as this may interfere with the investigation and subsequent prosecution. Any enquiries are being directed to the police. In line with the mine’s policies, no employees may return to work until they have been declared fit by an independent medical practitioner. In addition, the mine is providing independent counselling services to all employees affected by the incident. In addition to standard employee benefits, the mine assisted injured employees, as well as families of the deceased, through the claims process and all applicable benefits were paid out in full. The JV partners have also contributed additional sums to assist affected families.
* For 2018, this is a subjective assessment. We are working on a more objective, quantifiable method.
12 Anglo American Platinum Limited Integrated Report 2018 OUR BUSINESS
Strong relationships Cordial relationships Weak relationships
STAKEHOLDER AND LINK TO STRATEGY/ MATERIAL QUALITY OF ISSUE RELATIONSHIP* KEY ISSUES RESPONSE Ga-Molekana community In 2004, local communities established a labour desk to enable accusing Mogalakwena Mine their members to apply for vacant positions at the mine or its of employing outsiders and contracting companies. This has evolved over the years, working not giving local businesses an closely with Mogalakwena Mine. The labour desk is managed by opportunity to participate in members of the community from neighbouring villages to supply-chain initiatives ensure a transparent application process. Résumés received through the labour desk are screened to ensure applicants are from local villages, then matched to requirements of vacant positions. Once both these criteria have been satisfied, Amplats HR processes are followed, ie interviewing, assessments, etc. This process applies to recruiting locals for both the mine and its contractors. All entry-level permanent positions are reserved for locals who meet the requirements. Currently 84% of Mogalakwena staff are locals, while our contractors have 67% local employee representation. In addition to supporting employment growth in related areas, our supply chain department has trained over 1,200 entrepreneurs in host communities around the mine. As a result, 38 direct contracts and 16 joint ventures have been awarded to local entrepreneurs. Creating sustainable communities is a core priority for Amplats and, in 2018 alone, R40 million procurement spend has flowed into businesses at Ga-Molekana village. Bench Marks Foundation Amplats has made great progress with its community Policy Gap 13 Report, making engagement initiatives, community spend, health and safety allegations on issues ranging performance and environmental management over the from the company’s inability reporting period reviewed by Bench Marks Foundation and Media to report transparently on beyond, despite the difficult financial conditions under which (continued) material sustainability issues the company has operated in recent years. The assertion that to a lack of community shareholders have benefited unduly is inconsistent with engagement and inadequate demonstrated contributions to communities, our employees, social spend, finding that the and the South African fiscus. company has been paying While we are proud of our sustainability performance over the huge dividends to years, we are committed to continuous improvement in line with shareholders compared to our vision of re-imagining mining to improve people’s lives. As benefits to others, unmet such, we will continue to engage with Bench Marks Foundation employee housing to improve both our sustainability performance and reporting commitments and a number practices. The case study in our 2018 sustainability report of environmental issues covers the outcomes of these engagements and changes we have made to our sustainability practices and reporting in relevant areas. These engagements create substantial value for the company and consequently our stakeholders, and we value our continued engagement with the foundation. Daily Maverick allegations of Amplats refutes the allegations of fraud and corruption in a corrupt relationship with articles published by the Daily Maverick (‘Stealing the Crust: Kgosi Nyalala Pilane of the How the Bakgatla-Ba-Kgafela were robbed of their inheritance’ Bakgatla Ba Kgafela and ‘Investigative analysis: Stealing the Crust II: All players in a community heinous SA mining fraud’). A detailed review of company records on dealings with the Bakgatla traditional community and Kgosi Pilane has shown that all dealings were above board and lawful. A detailed response is available on our website.
* For 2018, this is a subjective assessment. We are working on a more objective, quantifiable method.
Anglo American Platinum Limited Integrated Report 2018 13 PILLARS OF VALUE: SOCIO-POLITICAL, PEOPLE
STAKEHOLDERS CONTINUED
Strong relationships Cordial relationships Weak relationships
STAKEHOLDER AND LINK TO STRATEGY/ MATERIAL QUALITY OF ISSUE RELATIONSHIP* KEY ISSUES RESPONSE In-depth and continual Formal responses were prepared to NGO reports. Meetings engagement with local and were held with NGOs to discuss key issues. Open dialogue international NGOs in 2018. with affected NGOs has enabled greater transparency and Issues under discussion collaboration in working towards improving in socio-economic included environmental, and environmental performance. NGOs economic, social, labour and sustainability reporting Customers from the There was active and regular communication on sustainability- automotive and jewellery- related issues, including visits by and to customers, in 2018. sectors showed interest in These discussions have strengthened communication our sustainability-related channels and collaboration between Amplats and its performance and issues. customers. Dialogue centred around Customers development of our sustainability strategy and addressing key social and environmental issues A supplier of mining At quarterly feedback meetings with the supplier, key equipment engaged actively sustainability-related matters were discussed. The supplier with Amplats in 2018 on visited our sites to enhance its understanding of our sustainability issues. This sustainability performance and initiatives. Amplats created the need for regular representatives visited the supplier to understand its specific Suppliers feedback meetings, where sustainability challenges. detail was provided on pertinent sustainability topics •• AMCU demanded the Quarterly meetings with senior union leadership to discuss key transfer of AGPF to IGULA strategic issues: and also disputed the •• Safety, health and environment (SHE) through community transfer of employees’ forums/bilateral sessions funds in the AGPF to •• Company strategies and implementation Old Mutual; •• Performance of the company (leadership forum attended by •• The NUM and UASA raised executives) as a concern and referred •• Relationship-building with union leadership and dispute disputes to the CCMA and resolution using different platforms Labour Court, the salary •• Address unions’ interest issues or community issues Unions related allowances that affecting business (leadership forum and CEO sessions) were frozen in the 2016 All issues affecting Amplats are addressed in various forums wage agreement; and and, where appropriate, escalated to the CEO. •• NUMSA is disputing the payment, in terms of the 2016 wage agreement, of the Holiday Leave Allowance or 13th cheque.
* For 2018, this is a subjective assessment. We are working on a more objective, quantifiable method.
14 Anglo American Platinum Limited Integrated Report 2018 OUR BUSINESS
ENGAGING WITH OUR HOST COMMUNITIES
In line with the Anglo American social way, each of our operations has mapped the stakeholders who have an interest in and are affected by our operations. They update their stakeholder engagement plans annually, informed by risks and impacts in host areas and as part of maintaining relationships with different stakeholders.
All our operations have community engagement forums or leadership forums in place. Monthly engagements with these community-elected structures address issues of mutual interest and track progress commitments made by the mines, such as SLP delivery, CSI initiatives, employment and procurement opportunities.
In addition, Amplats has partnered with interfaith leaders in our communities as an engagement and development partner. This is part of the Courageous Conversation movement in which churches engage with the mining industry to address issues affecting host communities and as a trusted stakeholder to help shape development agendas. The programme started in Mapela in 2017 and is now being rolled out to Twickenham and Der Brochen.
We also engage with different business forums in our host communities, mainly on procurement opportunities and supplier- development issues in our operations. Amplats’ operations have multipurpose hubs where emerging, and established, entrepreneurs can access information about opportunities on mines, as well as ways to access financial or business support from our supply chain division or from Anglo American Zimele.
Our field workers, mainly previously unemployed youth from host communities, continue to engage with and provide feedback to stakeholders who have raised issues or queries with any of our sites. The field workers ensure that, individually, families do not have to wait for the forums to get information or feedback, but can engage directly with the field workers in their own homes.
Anglo American Platinum Limited Integrated Report 2018 15 OUR MATERIAL ISSUES
Realising our strategic objectives may be affected by matters that substantively affect our ability to create value over the short, medium and long term. Our success will be measured by how well we manage these issues while retaining our focus on longer-term goals.
LINKS TO PILLARS OF MATERIAL ISSUE AND STRATEGIC VALUE ASSOCIATED TOPICS IMPACT GOAL READ MORE
Health and safety Injury and absentee rates are generally Zero harm The respective •• Employee and community linked to trends in morale and pillars are health and safety productivity. Amplats’ aim is for zero detailed in the •• Fire risk and explosives harm, supported by targeted health supplementary management and safety initiatives which should report Safety and •• Tailings storage facility failure result in fewer health and safety health •• Reduction of airborne pollutants incidents. and inhalable hazards Market conditions Changing global economic conditions Develop the The respective •• Future demand and supply of affect markets and, in turn, our position market for PGMs pillars are PGMs in those markets. Future demand for to increase detailed in the •• Economic growth prospects PGMs is at risk from slower growth in demand supplementary in South Africa combustion engine manufacturing, report •• Price and exchange rate technological developments in battery volatility vehicles, suppressed jewellery sales, •• Global commodity prices as well as Amplats’ dependency on Financial/ •• Electrification of the automotive market segments such as autocatalyst socio- drive train and diesel vehicles. Market political •• Market development; focused development is therefore a priority, on jewellery demand, and latent demand across jewellery, supporting hydrogen economy investment and industrial segments and enhancing platinum presents a large and growing investment products opportunity. Delivering maximum potential Focus on value-enhancing growth Extract the full The respective of our operating assets optionality: deliver the full potential of potential from our pillars are •• Expansion of Mogalakwena Amplats’ own operating assets through operations detailed in the •• Sustainability of Unki synergies and world-best operating through our supplementary •• Social impact of mechanisation practices. Failing to make efficient and people and report at Amandelbult value-creating investments on time innovation •• Repositioning assets towards and within budget would jeopardise Invest in our core value optimisation the sustainability of our business. Financial portfolio that •• Failing to make secure delivers industry- investments and grow our leading cash leadership flows and returns
16 Anglo American Platinum Limited Integrated Report 2018 OUR BUSINESS
Our established materiality process aims (page 19) to ensure that societal, environmental and economic issues that present risks and opportunities to Amplats are identified, while considering issues of salient concern to external stakeholders.
LINKS TO PILLARS OF MATERIAL ISSUE AND STRATEGIC VALUE ASSOCIATED TOPICS IMPACT GOAL READ MORE
Political and regulatory Changes in the political and regulatory Build leading The respective uncertainty environment (eg mining charter, community and pillars are •• New mining charter: MPRDA amendments, failing to deliver stakeholder detailed in the procurement challenges, on social and labour plans, changes to relationships, and supplementary applicability to the Precious land and water legislation) can impact make a lasting report Metals Act, enhanced our business through increased contribution Socio- community expectations compliance requirements and costs. political/ •• Land access and resettlement Political instability can also affect financial •• Expropriation of land and SA business operations as it impacts land policy investor sentiment. •• Regulatory compliance risks Social licence to operate To expand local employment Extract the full The respective •• Employee and labour relations opportunities, increase tax revenues, potential from pillars are •• Transformation and meet increasing community our operations detailed in the •• BEE procurement demands for improved infrastructure through our supplementary •• Alchemy community and greater environmental protection, people and report empowerment initiative government continues to put pressure innovation •• Human rights assessment on the mining industry. Accordingly, •• Employee and community there is a growing need to achieve Build leading ownership measurable social outcomes and build community and •• Relationships with stakeholders sound relationships around operations. stakeholder •• Local economic development Engaging with stakeholders is key to relationships, and •• Local procurement and supplier implementing our business strategy. make a lasting Socio- development Failing to do so jeopardises our social contribution political/ •• Community unrest licence to operate and could reduce people opportunities in the market. Creating resilient mining Our vision is for economically diverse Build leading The respective communities and sustainable communities with a community and pillars are •• Planning for local economic future beyond mining, through mining. stakeholder detailed in the activity and social sustainability This will require companies to leverage relationships, and supplementary post life of mine the digital infrastructure, create new make a lasting report education models, improve contribution communication, develop suppliers, or deliver other services.
Anglo American Platinum Limited Integrated Report 2018 17 OUR MATERIAL ISSUES CONTINUED
LINKS TO PILLARS OF MATERIAL ISSUE AND STRATEGIC VALUE ASSOCIATED TOPICS IMPACT GOAL READ MORE
Ethical leadership and culture Mining companies face regional and Organisational The respective •• Internal fraud and corruption global scrutiny, and conforming to culture anchored pillars are •• Fraud and corruption at formal ethical standards of conduct is on a significant detailed in the national level non-negotiable. Fraud and corruption leadership style supplementary •• Company code of conduct can increase in an economic downturn, and values report •• Improved cooperation with and the current societal spike in orientation NGO and religious leaders exposure to corrupt practices and unethical leadership heightens the risk to Amplats. Talent development, attraction As manual jobs are replaced by Extract the full The respective and retention automated processes, labour potential from pillars are •• Women in mining dynamics will shift significantly. Greater our operations detailed in the •• Leadership succession reliance on digital solutions could through our supplementary •• Education and training result in job losses, raising concerns people and report •• Re-envisioning talent about social responsibility to innovation People management in the digital age communities and the existing workforce. Conversely, this Achieve best can translate into new employment practice, opportunities as new roles are created. modernisation It can accommodate the realities of and innovation shifting global demographics by across our value enabling more women and seniors to chain enter and remain in the workforce. As such, mining companies should consider how to reskill and retrain people to learn technology and tools faster. Technology and innovation Technology holds the promise of Extract the full The respective •• Mechanisation and increasing production, improving potential from our pillars are modernisation safety and creating new opportunities operations detailed in the •• Beneficiation and recycling for people and communities. through our supplementary of PGMs people and report Mechanisation and modernisation are •• Technology developments innovation key enablers of business sustainability downstream and linked to the long-term goals of Production/ •• Using data-driven insights to innovation and operational excellence. cost create value Data-driven insights can integrate and streamline business processes to create a more responsive organisation. Responsible use of resources Amplats is committed to achieving net Zero harm The respective •• Water infrastructure and positive water, air and biodiversity pillars are management impacts with social co-benefits, which detailed in the •• Energy infrastructure and implies full implementation of the supplementary management impact-mitigation hierarchy, including report •• Emissions reduction avoidance, minimisation, restoration •• Waste management and offset measures. The goal is to Environment •• Biodiversity support our long-term sustainability by •• Concurrent rehabilitation and effectively managing resources, mine closure provision reducing impact on the environment •• Climate change and communities, and complying with legal requirements. * Refer to supplementary report for detail on each pillar.
18 Anglo American Platinum Limited Integrated Report 2018 OUR BUSINESS
INTERNAL MATERIALITY We conducted an internal materiality scan to identify and contextualise Amplats’ relevant issues. This involved assessing matters that directly affect the company by reviewing relevant information such as board and committee packs; social, ethics and transformation reports; audit and risk committee reports as well as safety and sustainable development reports. These reports were analysed to identify relevant issues acknowledged or addressed in the period.
EXTERNAL MATERIALITY Issues affecting our external environment, and the mining sector in general, were assessed by analysing media articles, research materials, industry benchmarking studies and economic outlook reports as well as interviews with key stakeholders. Key reports reviewed included the Bench Marks study of Amplats’ sustainable development reporting from 2003 to 2015 and Brot für die Welt: Noble metal – unworthy degradation (Bread for the World is the globally active development and relief agency of the Protestant Churches in Germany). To ensure impartiality, we commissioned an external specialist to engage with key stakeholders in one-on-one interviews. This process helped validate whether identified material issues are aligned to issues stakeholders believe are most material to our ability to create value.
MATERIALITY WORKSHOP A workshop with relevant internal and external stakeholders refined and prioritised our material issues based on their potential impact and Amplats’ ability to influence these. The workshop group (a multidisciplinary group of 30 representatives) was given the opportunity to add any material issues not identified through internal and external reviews.
STAKEHOLDER ENGAGEMENT ON MATERIAL ISSUES The external specialist engaged with representatives from key external stakeholders to identify the issues they believe are most material to Amplats. The relevant matters fed into the prioritisation and review steps described above and ultimately into the final list of material issues.
Anglo American Platinum Limited Integrated Report 2018 19 OUR STRATEGY – THE NEXT FIVE YEARS
With our portfolio largely reshaped, our focus now turns to extracting further value – fuelled by operational excellence – to deliver sustainable returns.
In recent years, we have taken the difficult decisions and made Given that, the pricing and operating environments remain progress with the ‘hard’ work to improve the resilience and earnings challenging. We continue to run our business for the current price potential of our business. We continue to invest for the future, environment. We believe we have the portfolio to generate superior ensuring we influence our destiny by facilitating market returns for our stakeholders and optionality to benefit from development for PGMs and completing project studies that improving PGM fundamentals. increase optionality, synergies and cash flow. We are modernising The performance review, beginning with the chairman’s letter on our business through innovation, ensuring we have an engaged page 32, details our progress and summarises strategic plans to workforce and supportive stakeholders. continue creating value.
PURPOSE: RE-IMAGINE MINING TO IMPROVE PEOPLE’S LIVES
By re-imagining mining, we unlock the potential of our precious metals and people to create a positive impact on people’s lives and the environment.
Our strategic priorities 1 2 3 Extracting the full potential Investing in our core portfolio Facilitating the development from our operations through that delivers industry-leading of the market for PGMs to our people and innovation cash flows and returns increase demand
… delivered in a safe, values-driven and socially responsible way
ZERO HARM – Safety, Organisational culture Best practice, Building leading health and environment anchored on a modernisation and community and significant leadership innovation across our stakeholder style and values value chain relationships, and orientation making a lasting contribution
Built on our pillars of value
FINANCIAL RETURNS SAFETY AND ENVIRONMENT SOCIO-POLITICAL HEALTH
PEOPLE PRODUCTION COST
20 Anglo American Platinum Limited Integrated Report 2018 HOW WE CREATE VALUE BUSINESS CONTEXT AND STRATEGY
We will achieve our value proposition by implementing the next value-enhancing phase of our strategy (summarised below and detailed from page 56).
STRATEGIC PRIORITY HOW LONGER-TERM TARGETS
Through the operating model, delivering Such as: 1 Extracting the full potential from stable and optimised performance •• Mining: our operations through our – 45Mtpa shovel performance from people and innovation Achieving global best practice 26Mtpa in 2018 Setting best practice through technology – Steepening of open pit slope angles and innovation •• Concentrating: – 10% throughput increase – 83% recoveries from 81% •• Smelting and refining – 81% operating factor from 73% •• Smelting and refining – 81% operating factor from 73% •• Investing in technology
Investing in key value-enhancing projects Fast-payback projects Mototolo/ 2 Investing in our portfolio to Der Brochen expansion deliver industry-leading cash Mogalakwena expansion flows and returns
Investing in: Market development 3 Facilitating the development of •• Platinum Guild International – jewellery the market for PGMs to increase demand demand •• World Platinum Investment Council – investment demand •• AP Ventures – industrial demand •• Policy advocacy – hydrogen and fuel cells •• R&D on uses for PGM
Strategy in action FY18
Quality of assets Paying a dividend while industry 12-month share price Inclusive mineral resource requiring capitalisation (Rbn) performance
Inclusive mineral resource (4E Moz) – Returns AAP Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 – Funding to shareholders from shareholders (Rm) 52% Anglo Platinum 760
Peer 1 363 1,90 AAP
Peer 2 142 13% (4,00) 3,94 Peer 1
Peer 3 116 (12,80) Peer 2 (5%) Peer 4 105 (17%) (4,60) Peer 4 Peer 5 46 (34%) (40%)
Anglo American Platinum Limited Integrated Report 2018 21 HOW WE CREATE VALUE CONTINUED
HOW WE REWARD SUCCESS The key results areas shown below for the CEO and prescribed officers translate into measurable key performance indicators (KPIs) that determine the variable component in their remuneration (refer remuneration report from page 118). Flowing from this reward structure, Amplats’ most important KPIs are summarised below.
Pillar of value KPI Unit 2018 target 2018 actual Achievement 2019 target TRCFR /million hrs 3.01 3.00 2.88 Fatalities Number 0 2 0 Safety and Health HIV management (90:90) % 90:90 88:90 90:90 Zero level 4 and 5 Number 0 0 0 incidents Energy intensity GJ/ton milled 0.83 0.79 0.81 Total energy used million gigajoules 19.3 20.0 20.5 Environmental Water intensity m³/tonnes milled 1.08 0.96 1.17 Total water withdrawals Megalitre 24.36 24.43 29.6
Compliance to SO2 % 100 100 100 emissions permits Anglo social way Score average 3.2 3.2 3.9 3.2
Socio-political
PGM M&C production koz 5,008 5,187 4,200 – 4,500 Refined PGM production koz 4,962 4,785 4,600 – 4,900
Production Productivity PGM ounce PGM oz 107 108 per employee Unit costs R/Pt oz 19,814 20,684 21,000 – 22,000 EBITDA Rbn 10.5 14.5 Operating free cash flow Rbn 4.4 11.8 Return on capital % 14 24 employed (ROCE) Financial Capital expenditure Rbn 5.0 4.7 5.7 – 6.3 (capex) Cash flow return % 9 24 Fully achieved Partially achieved Not achieved
CEO Prescribed officers
10% 15% 10% I Group financial targets 20% I Business performance I Returns/financial I 20% 30% Critical and important tasks I Production and sales I SHE I 60% Costs I Critical tasks 10% 25% I Health and safety
22 Anglo American Platinum Limited Integrated Report 2018 OUR APPROACH TO RISK AND BUSINESS CONTEXT AND STRATEGY OPPORTUNITY MANAGEMENT
GROUP RISK FRAMEWORK •• The risk management process is continuous; key risks are In an evolving risk environment filled with technological changes reported to the audit and risk committee, with sustainability risks and new global commodities, identifying and managing risks and also reported to the sustainability committee. The chairman of opportunities are critical to our business. Amplats’ integrated risk the two respective committees report to the board on a management framework ensures the effective governance of quarterly basis. operational and strategic risks. We define risks as situations or We aim to embed the process of identifying risks and opportunities actions with the potential to threaten our ability to deliver on our so that it becomes part of everything we do to achieve the full scope strategic priorities and, ultimately, to create value. Our risk of risk management. management process is aligned with ISO 31000 international risk management standards and King IV requirements. OPPORTUNITIES
Our assessment of strategic, operational and project-related risks As part of our risk management process and in line with King IV follows four well-defined processes: requirements, we have considered opportunities (where available) for our key risks. The opportunities identified from page 24 demonstrate the value that our initiatives and strategies could yield to the growth of our company. Our business model (page 6) and 1 2 3 4 review of our external environment (page 14 of the supplementary Identify Analyse Determine Report report) elaborate on how we leverage opportunities to ultimately risk risks and management and controls actions monitor create value. CATASTROPHIC RISKS We also face certain risks that we deem catastrophic. This a risk or series of related risks potentially generating financial, operational and/or reputational impacts of such significance that they force IDENTIFYING RISKS an unplanned, fundamental change to our strategy, the way we •• We use a robust methodology to identify key risks across the operate or our financial viability. Accordingly, catastrophic risks business, operations and projects. This is applied consistently are treated with the highest priority. by developing and implementing the Anglo American group integrated risk management standard The following catastrophic risks have been identified, and all •• Operations identify risks by function. This information is relevant technical standards are in place to provide minimum consolidated and considered by the Amplats executive criteria for managing these risks. Monitoring, inspections and committee, audit and risk committee, and the board in a formal training and awareness programmes are provided by technical risk workshop where risks are compared and aligned to those experts. identified at strategic level.
ANALYSING RISKS AND CONTROLS TO MANAGE Fall-of-ground Explosion and fire Slope failure IDENTIFIED RISKS •• Asset structural Tailings dam Once identified, the process evaluates identified risks to establish Transportation root causes, financial and non-financial impacts and likelihood of failure failure occurrence •• Risk treatments are considered to create a prioritised risk register RISK APPETITE AND TOLERANCE •• External views are also considered – including risks identified by The concept of risk appetite guides our risk management activities. our customers, investors and the market. It enables the executive committee and board to establish a baseline level of risk the company is willing to accept and evaluates DETERMINING MANAGEMENT ACTIONS REQUIRED the likelihood and impact of certain threats. We look at risk appetites •• The effectiveness and adequacy of controls are assessed. If from the context of severity of consequences should the risk additional controls are required, these are identified and materialise, any relevant internal or external factors influencing the responsibilities assigned. risk and the status of management actions to mitigate the risk. Risk tolerance refers to the amount of risk Amplats is able to withstand. REPORTING AND MONITORING Both are core considerations in determining our strategy. •• Management is responsible for monitoring progress on mitigating key risks and determining if the risk is operating within the limits of our risk appetite •• Management is supported by an internal audit programme, which evaluates the design and effectiveness of controls
Anglo American Platinum Limited Integrated Report 2018 23 OUR APPROACH TO RISK AND OPPORTUNITY MANAGEMENT CONTINUED
OUR JOURNEY IN RISK APPETITE MATURITY Using risk management as a tool to address uncertainties, applying the risk appetite methodology in 2018 highlighted two of six catastrophic risks – asset structural failure, and fire and explosion – as being outside of appetite, but are still within Amplats’ tolerance. This was prompted by evaluating data from the operational risk assurance programme accumulated over the last three years. Identified control weaknesses are being addressed through management actions, comprising immediate interventions supported by long-term plans to bring these catastrophic risks back within appetite. This will be a continuous improvement process executed by applying the following principles:
Identifying risks l We use a robust methodology to identify key risks across the business, operations and projects. This is applied consistently by developing and implementing the Anglo American group integrated risk management standard l Operations identify risks by function. This information is consolidated and considered by the Amplats executive committee and audit and risk committee, where risks are compared and aligned to those identified at strategic level.
1 Identify risk Reporting and monitoring Analysing risks and controls to manage l Management is responsible for monitoring identified risks progress on mitigating key risks and l Once identified, the process evaluates determining if the risk is within the limits Our identified risks to establish root causes, of our risk appetite assessment of financial and non-financial impacts and l Management is supported by an 4 strategic, operational 2 likelihood of occurrence internal audit programme Reporting and project-related Analyse risks l Risk treatments are considered to that evaluates the design and and monitor and controls create a prioritised risk register effectiveness of controls risks follows four well-defined l External views are also considered l The risk management process is – including risks identified by our continuous; key risks are reported to processes customers, investors and the market. the audit and risk committee, with sustainability risks also reported to the sustainability committee. 3 Determine management actions
Determining management actions required l The effectiveness and adequacy of controls are assessed. l If additional controls are required, these are identified, andresponsibilities assigned.
TOP 10 RISKS The heat map positions (below) reflect residual risks. Our actions to manage risks are detailed from page 26. AMPLATS’ TOP 10 RISKS CONSEQUENCE 1 Employee safety INSIGNIFICANT MINOR MODERATE HIGH MAJOR 2 Labour unrest 7, 8 1, 2 3 Future demand for and supply of PGMs 4 Macro-economic uncertainty creating price and exchange certain Almost rate volatility 4, 5, 6 5 Political and regulatory compliance risk
Likely 6 Social licence to operate 9, 10 3 7 Infrastructure power LIKELIHOOD
Possible 8 Information security 9 Failing to deliver the full potential of operating assets 10 Failing to invest to secure and grow our leadership position Unlikely
Rare
24 Anglo American Platinum Limited Integrated Report 2018 BUSINESS CONTEXT AND STRATEGY
On the following pages, we summarise the top 10 risks facing the business, our mitigating strategies and where these risks fit in with our strategic priorities.
DESCRIPTION OF RISK AND ITS CONTEXT OPPORTUNITIES
Failing to deliver a sustained improvement in safety performance. Senior management continues Introduction of new digital safety, to prioritise safety risk management. Given the number and nature of high-potential incidents health and environment (SHE) (HPIs) and an increase in incidents related to not adhering to basic safety rules and standards, incident management and 1 significant work remains. real-time analytics has the ROOT CAUSE potential to reduce future EMPLOYEE •• Inconsistent application of safety rules and hazard identification, including non-compliance to incidents. SAFETY critical controls •• Exposure to major safety-related issues: material handling, fall-of-ground, transport, moving Predictive big-data analytics No change in machinery, working at heights system to identify and notify risk rating from SHE potential risks. prior year POTENTIAL IMPACTS •• Loss of life •• Workplace injuries •• Safety-motivated stoppages by regulators •• Threats to our licence to operate MITIGATION •• Implementing safety management system standards, fatal risk standards and safety golden rules, supported by robust risk management and risk assurance processes •• Creating a leadership approach and culture conducive to innovation and improved safety performance. Enhance people development, using KPI-based reward and recognition to drive behaviours •• Move up the hierarchy of controls through innovation and engineering capability •• A continued, relentless focus on safety improvement and safety risk management adopted by executive management •• Elimination of fatalities programme
RISK APPETITE RISK TOLERANCE •• Currently within risk appetite, but •• Within tolerance potential to exceed it
PILLARS OF VALUE
SAFETY AND PEOPLE HEALTH
Anglo American Platinum Limited Integrated Report 2018 25 OUR APPROACH TO RISK AND OPPORTUNITY MANAGEMENT CONTINUED
DESCRIPTION OF RISK AND ITS CONTEXT OPPORTUNITIES
Labour unrest that leads to stoppages, strike action and violence has an enormously negative effect We are progressing with our on Amplats, including the ability to stop production. The labour climate remains volatile in South Africa, organisational culture and the potential for labour unrest is heightened due to the upcoming 2019 wage negotiations. transformation (OCT) project, which 2 ROOT CAUSE has the potential to change our •• Wage gap and unionised employees’ expectations to earn higher salaries work environment in a positive way, LABOUR •• Labour instability due to rivalry between AMCU and NUM, the major unions at Amplats motivating the workforce and UNREST yielding positive production returns. POTENTIAL IMPACTS Risk increased •• Production and financial loss (2017: 11) •• Damage to assets during violent protest action •• Loss of life •• Negative reputation MITIGATION •• Actively engaging our employees and labour unions to rebuild a relationship of trust •• Bilateral with union leadership at the various levels RISK APPETITE RISK TOLERANCE •• Currently within risk appetite but potential •• Within tolerance to exceed it PILLARS OF VALUE
PEOPLE PRODUCTION FINANCIAL COST
Future demand for PGMs is at risk from potentially slower growth in manufacturing combustion- Established a venture capital fund engine motor vehicles, technological developments resulting in battery electric vehicles competing (AP Ventures) dedicated to with hydrogen fuel cell electric vehicles, and suppressed jewellery sales, although some upside investing in technological innovation 3 potential also exists. Amplats’ dependency on certain market segments, eg autocatalyst and diesel across PGMs. vehicles, puts the company at risk. Jewellery (PGI) and investment FUTURE ROOT CAUSE DEMAND •• Changes to consumer preference and environmental legislation impacting diesel motor vehicle demand (WPIC) have created new AND •• Battery electric vehicle adoption substituting internal combustion engine (ICE) and threatening/ partnerships and products SUPPLY delaying fuel cell electric vehicle adoption market launched. OF PGMs •• Suppressed or negative jewellery demand For industrial fuel cells, a •• No change in risk Secondary PGM supply from recycling co-investment by Shell and rating from prior •• Potential increase of primary supply from competitors (exacerbating demand supply imbalance) •• Toyota in seven hydrogen refuelling year Future technological developments that may result in significantly lower barriers to entry into PGM mining industry stations in California, and the launch •• Price sensitivity of individual commodities and price substitution. of a USA and UK fuel advocacy all •• Potential to substitute palladium with platinum in gasoline vehicle catalysts have the potential to stimulate •• Potential upside for growth from heavy-duty diesel, fuel cells and Indian jewellery demand for PGMs.
POTENTIAL IMPACTS •• Weakened cash flow, profitability and ROCE •• Loss of investor confidence MITIGATION •• Investigating multiple demand segments to reduce risk through marketing and stimulating demand •• Invest in new PGM technologies, leveraging our footprint to add value •• Active market development in Indian/Chinese jewellery
RISK APPETITE RISK TOLERANCE •• Currently within risk appetite, but •• Within tolerance potential to exceed it
PILLARS OF VALUE
FINANCIAL PRODUCTION
26 Anglo American Platinum Limited Integrated Report 2018 BUSINESS CONTEXT AND STRATEGY
DESCRIPTION OF RISK AND ITS CONTEXT OPPORTUNITIES
Macro-economic uncertainty creating price and exchange rate volatility impacting weakened levels of cash flow, profitability and ROCE. ROOT CAUSE 4 •• The global economic environment could impact the price for PGMs •• Current political factors could impact the exchange rate MACRO- •• Slower-than-expected growth in emerging economies ECONOMIC •• Weak demand for and negative sentiment on PGMs could affect the price UNCERTAINTY •• Global trade wars CREATING POTENTIAL IMPACTS PRICE AND •• Weakened cash flow, profitability and ROCE EXCHANGE •• Reduced ability to exploit future growth/value-enhancing initiatives. RATE MITIGATION VOLATILITY •• Strategy to position Amplats in H1 of cost curve, ensuring sustainable return No change in risk •• Integrated planning process rating from prior •• Regular updates of economic analysis and commodity price assumptions to management year •• Continued focus on operational improvements, cost control, disciplined capital allocation and cash generation •• Unprofitable production will be removed
RISK APPETITE RISK TOLERANCE •• Currently within risk appetite, but potential •• Within tolerance to exceed it
PILLARS OF VALUE
SOCIO- COST FINANCIAL POLITICAL
Failure to resolve critical country-specific issues such as economic growth, land reform, education, healthcare, infrastructure development and corruption continues to impact AAP. Furthermore, changing regulatory requirements increase the risk of non-compliance and failing to deliver on our social and labour plans (SLPs). 5 ROOT CAUSE POLITICAL •• Uncertain regulatory environment AND •• Critical country-specific issues such as economic growth, land reform, education, health care, infrastructure REGULATORY development and corruption COMPLIANCE •• Local procurement requirements and unemployment No change in risk POTENTIAL IMPACTS rating from prior •• Non-compliance to mining charter requirements and SLP commitments year •• Sections 53 and 54 leading to loss of production and financial loss •• Increased costs of conducting business through additional regulation MITIGATION •• Active engagement with government and other stakeholders •• Deliver on agreed SLPs, mine work plans and environmental management programmes •• Actively monitoring regulatory developments, updating applicable policies and procedures to ensure compliance
RISK APPETITE RISK TOLERANCE •• Currently within risk appetite, but potential to •• Within tolerance exceed it
PILLARS OF VALUE
SOCIO- PRODUCTION COST FINANCIAL POLITICAL
Anglo American Platinum Limited Integrated Report 2018 27 OUR APPROACH TO RISK AND OPPORTUNITY MANAGEMENT CONTINUED
DESCRIPTION OF RISK AND ITS CONTEXT OPPORTUNITIES
If local communities and wider society actively oppose the existence of our operations, our ability Strategies and plans in place to to conduct our activities could be threatened. There are rising levels of dissatisfaction among further empower communities communities on social delivery, unresolved legacy issues, and less-than-expected benefits around us, eg Anglo American 6 from mining. Zimele’s youth development ROOT CAUSE programme that aims to address SOCIAL •• Dissatisfaction among communities on social delivery, community perception of the youth unemployment crisis in LICENCE TO transformation, employment and procurement activities South Africa. OPERATE •• Use of trust money by communities We have local government Risk increased •• Poor service delivery of local municipalities to communities initiatives in place, established (2017: 7) •• Less-than-expected benefit from mining joint community and operating •• Trust relationship between communities and Amplats decision-making frameworks, and •• Poor engagement between traditional leaders and communities improved NGO/religious leaders’ •• Resettlement obligations cooperation which all have the •• Society, NGO’s expectations as information scrutiny increases potential to grow our business and standing with our host POTENTIAL IMPACTS communities. •• Reduced levels of trust between mine and communities •• Community over-reliance on mines for economic benefits •• Potential human rights impacts on communities during protests •• Loss of production and possible damage to assets •• Negative reputational consequences MITIGATION •• Implementing social strategy: collaborative regional development approach, social risk and impact management, increased community and employee ownership, community participation model •• Compliance to the Anglo American social way •• Strategic stakeholder engagement with communities, local government, traditional leaders, NGOs and broader society •• Effective grievance mechanisms •• Initiate and implement remediation plans for previously resettled communities at Ga-Sekhaolelo Ga-Puka, Ga-Pila and Magobading •• Empower municipalities, traditional leaders and interfaith leaders
RISK APPETITE RISK TOLERANCE •• Currently within risk appetite but potential to •• Within tolerance exceed it
PILLARS OF VALUE
SOCIO- PRODUCTION FINANCIAL POLITICAL
28 Anglo American Platinum Limited Integrated Report 2018 BUSINESS CONTEXT AND STRATEGY
DESCRIPTION OF RISK AND ITS CONTEXT OPPORTUNITIES
The current financial state and ability of Eskom to sustainably supply power poses a risk Seek alternatives such as independent to Amplats. power producer’s options or renewables to offset reliance on Eskom. 7 ROOT CAUSE •• Dependency on Eskom •• Eskom requires funding for generation INFRA- •• Poor management of Eskom business and significant management changes STRUCTURE •• Eskom coal supply contracts (security of coal supply concern). (POWER) Risk Increased POTENTIAL IMPACTS (2017:12) •• Unplanned and short notice electricity supply outages leading to loss of production •• Safety implications particularly for underground mines and process activities •• Higher than inflation rate future costs increase placing business viability at risk MITIGATION •• Load curtailment process •• Participation at the Energy User Group •• Detailed emergency plans in place with regards to short-notice electricity supply outages •• Continuous improvement of efficiencies.
RISK APPETITE RISK TOLERANCE •• Currently within appetite, requires close •• Within tolerance monitoring
PILLARS OF VALUE
FINANCIAL SAFETY AND PRODUCTION COST HEALTH
Anglo American Platinum Limited Integrated Report 2018 29 OUR APPROACH TO RISK AND OPPORTUNITY MANAGEMENT CONTINUED
DESCRIPTION OF RISK AND ITS CONTEXT OPPORTUNITIES
Failing to sufficiently protect the data and information of certain initiatives or knowledge Implementing our digital transformation holders from leakage or attack. Anglo American as a group has recorded a rise in attacks. strategy will enable IT architecture and interfaces as well as digital technologies 8 ROOT CAUSE that drive and support improvements. •• Improved capabilities of hackers/attackers INFORMA- •• Industrial espionage TION •• Rise in cyber breaches (eg phishing, spoofing and hacking attempts) SECURITY POTENTIAL IMPACTS No change in risk •• Loss of critical and/or sensitive data rating from prior •• Reputational damage year •• Safety impacts (through loss of control of operating systems, particularly process systems) •• Financial losses MITIGATION •• Technical controls and existing capabilities are being extended to include monitoring high-risk assets and advanced network monitoring technologies •• Implementing augmented detection capabilities •• Security campaigns to create awareness
RISK APPETITE RISK TOLERANCE •• Within risk appetite. •• Within tolerance.
PILLARS OF VALUE
SAFETY AND PRODUCTION COST FINANCIAL HEALTH
Failing to deliver the full potential of operating assets due to non-delivery of productivity Amplats is committed to digitally targets, and delays in implementing operating model at operations. transform mining through the pervasive adoption of technologies, new ways of 9 ROOT CAUSE working and developing people’s •• Not meeting productivity targets technology skills. •• Delays in implementing operating model FAILING TO •• Delays in technology adoption Delivering value by unlocking processing DELIVER •• Failing to make Amandelbult investable again and Modikwa alternatives constraints. THE FULL •• Failure to maintain critical plant, machinery and infrastructure POTENTIAL Our digital transformation strategy aims OF POTENTIAL IMPACTS to increase operational efficiencies in the OPERATING •• Loss of production and revenue workplace. ASSETS •• Inability to deliver required cash flow, profitability targets. No change in risk MITIGATION rating from prior •• Deliver value by rolling out operating model at Mogalakwena and Amandelbult year •• Continue debottlenecking downstream process capacity •• Continue research and development on cutting technology, XLP and ULP •• Continue with organisational development and transformation •• All optimisation initiatives tracked and reported
RISK APPETITE RISK TOLERANCE •• Within risk appetite, high consequence •• Within tolerance rating requires close monitoring.
PILLARS OF VALUE
FINANCIAL PRODUCTION COST
30 Anglo American Platinum Limited Integrated Report 2018 BUSINESS CONTEXT AND STRATEGY
DESCRIPTION OF RISK AND ITS CONTEXT OPPORTUNITIES
Ensuring efficient investments and effectively executing value-accretive projects on time Acquiring our partner’s interest in and within budget. Mototolo helps unlock the potential of the Der Brochen resource. In the short 10 ROOT CAUSE •• Worsening economic environment impacting projects term, we have a unique opportunity to •• Long-term strategic inconsistency (group/business unit) improve cash flow generation and FAILING TO •• Studies not progressing as planned returns by increased processing of INVEST TO •• Inability to transform into a modernised organisation higher-margin mined production from SECURE •• Lack of fit-for-purpose design and standards (cost, time, competitiveness) Mogalakwena and/or Der Brochen AND GROW •• Capital allocation expansion. OUR •• Uncertainty of PGM demand fundamentals LEADERSHIP •• Lack of enabling infrastructure to support expansion POSITION No change in risk POTENTIAL IMPACTS rating from prior •• Fall behind competitors and lose competitive advantage or positioning year •• Negative cost curve impact due to projects not coming online •• Loss of potential revenue in the profit pool •• Loss of mining rights MITIGATION •• Focus remains on advancing low-capex, fast-payback projects and completing project studies to retain flexibility on project delivery •• Portfolio management strategy revised and optimised •• Rigorous selection processes applied to capital allocation, including stay-in-business capital
RISK APPETITE RISK TOLERANCE •• Within risk appetite, high consequence •• Within tolerance rating requires close monitoring
PILLARS OF VALUE
FINANCIAL PRODUCTION COST
Anglo American Platinum Limited Integrated Report 2018 31 PILLARS OF VALUE: ALL PILLARS
CHAIRMAN’S LETTER
SEVERAL NOTABLE MILESTONES IN 2018 DEMONSTRATE THE SOLID FOUNDATIONS WE HAVE PUT IN PLACE OVER THE PAST SIX YEARS TO BUILD A MODERNISED MINING COMPANY AND UNLOCK OUR FULL POTENTIAL
Tragically, we lost two colleagues during the year. This is simply not oversight required to ensure safe production, so that every acceptable and we will not rest until we reach our goal of zero harm. employee can go home unharmed at the end of every shift. Although we understand that changing human behaviour takes Our progress against strategic objectives for the year to time, we will not rest until we reach and sustain zero fatalities and, 31 December 2018 is detailed by the chief executive (page 35) or ultimately, zero harm. finance director (page 40), but to summarise the milestones: •• Significantly improved safety performance IMPROVED POLICY ENVIRONMENT •• Strong PGM production from all managed mines, but refined Mining is a long-term business, where it can take over a decade production affected by scheduled smelter rebuilds and other from the point of prospecting to first production. Equally, significant process interruptions capital is needed to start each project and it is often more than •• Improved efficiencies through modernisation and mechanisation 10 years before that capital investment is recouped. As such, evident. Together with improved metal prices and ongoing investors require a stable, conducive and competitive regulatory portfolio optimisation (including the sale of BRPM and environment to justify investing. acquisition of Mototolo), key financial metrics have improved substantially This had not been the case in South Africa for a number of years, •• Material regulatory developments, discussed below, have with amendments to our principal legislation (the Mineral and provided a measure of clarity for the industry on both policy Petroleum Resources Development Act or MPRDA) in the pipeline and compliance. for six years, and the third version of our principal compliance vehicle, the mining charter, gazetted in 2017 and then withdrawn The gratifying improvement in our safety performance reflects by the former minister of mineral resources. This was an extremely a revised, board-approved strategy and turnaround plan costly bureaucratic misstep for the industry, in terms of market implemented in 2018. The strategy was co-designed by employees, capitalisation, management time and the legal cost of compelling unions, officials and management to bring the next step-change in the withdrawal of this unfeasible legislation. performance needed for a modernised mining company to achieve zero harm. The benefits of joint responsibility are reflected in It is therefore heartening to report on policy progress in 2018. year-on-year improvements in fatalities, down from six to two, and Reflecting more focused leadership by South Africa’s new the total recordable case frequency rate, which improved 34% to president, Cyril Ramaphosa, and the new Department of Mineral 3.00 – both indications that we are on the right track. Resources minister, Gwede Mantashe, the MPRDA amendment bill I again reassure our stakeholders, particularly our employees and was withdrawn and a much-improved mining charter gazetted. their families, that the board continues to provide the governance
32 Anglo American Platinum Limited Integrated Report 2018 BUSINESS CONTEXT AND STRATEGY
In terms of the MPRDA, withdrawing proposed amendments allows from existing applications, new demand from applications being the mining industry to be governed by the Act in its present form developed, and stimulatory measures to develop the PGM market and removes a level of uncertainty for our sector. will support sustainable demand and, in time, foster growth. In September, the minister gazetted the mining charter of 2018 and Developing the market for our products is an ongoing strategic published implementation guidelines in December. This is a major focus. In addition to our work with Platinum Guild International improvement on the version gazetted under the prior administration (focused on jewellery demand) and the World Platinum Investment in 2017 and a further enhancement on the June 2018 draft. Council (focused on investment demand), in July 2018 we launched AP Ventures. We believe outstanding issues should be resolved through dialogue and negotiation so that the regulatory regime addresses the As cornerstone investors, Amplats and South Africa’s Public interests of key stakeholders. Although there is likely to be much Investment Corporation have committed USD200 political manoeuvering ahead of national elections in May 2019, million (R2.6 billion) to AP Ventures to invest globally in companies I remain hopeful that there is a way back to the negotiating table to that support the development of innovative and competitive address remaining concerns. We are very encouraged by technological uses of PGMs, in addition to supporting our existing comments from both the president and minister that urgent action investments. This is detailed by the CEO. is needed to restore investor confidence in the mining industry, Mining PGMs provides solutions to some of society’s key which will be good for Amplats, the broader sector and, most of all, challenges, including: the people of South Africa. •• Improving air quality and lowering emissions through SOUND GOVERNANCE UNDERPINS SUSTAINABILITY autocatalysts As a board, one of our key responsibilities is to ensure that our •• Decarbonisation and electrification through fuel cell technology corporate governance programme and practices align with best •• Carbon dioxide capture and storage practice. •• Enabling storage of renewable energy •• Advances in medical technology to aid wellness – from In the prior year, we rolled out a revised code of conduct that biomedical equipment to cancer treatments informs ethical decision-making in the Amplats business and in •• Improving everyday life by preserving food and treating water, all dealings with stakeholders. Most management levels have now among many others. received training against the requirements of the new code and are fully conversant on the associated obligations. THE NEXT PHASE OF OUR STRATEGY In response to structural changes in the PGM market, we have We keenly understand that our social licence to operate depends fundamentally transformed Amplats over the last five years from a on engaging with host communities – pivotal stakeholders in the loss-making deep-level, labour-intensive mining business to focus longevity of our mines. We have listened to community voices and on cash-generative, high-margin, open-pit and shallow mechanised implemented programmes focused on employment in our host operations. From the board’s perspective, this has been a communities as well as upskilling small businesses in these challenging and sometimes painful process, but the benefits are communities, enabling them to supply goods and services to our now clear. We commend the operational and executive mines. In addition, we are strengthening the capability of the management teams for their steady commitment to achieving our community trusts we have developed over the years so that they strategic goals and their discipline in the face of challenges often can distribute funds more effectively to implement community- outside their control. The Amplats of today is better positioned for initiated development projects. a sustainable future, as its sterling results for 2018 demonstrate – Communities around our operations understandably have high PGM production up 4%, productivity up 15% and profitability expectations of Amplats – from job opportunities and local up 21%. procurement to infrastructure projects – often asking us to perform For the next five years, by embracing our purpose (see page 20) the role of government. While unrealistic expectations cannot be and driving our updated strategy, we will enhance Amplats’ value met, nor can we take on the role of government, we have again this and earnings by taking operational performance to new best-in- year meaningfully supported community wellbeing, contributing class levels, investing in portfolio growth options and developing the 6% of net profit after tax (some R609 million) to regulatory social market for PGMs. and labour plans, and voluntary corporate social investment projects. Please refer to the chief executive officer and finance director’s reviews for detailed discussions on strategy and performance. LOOKING AT THE PLATINUM GROUP METALS MARKET In a mixed pricing environment for PGMs in 2018, the average DIVIDEND POSITION platinum price declined while other PGM prices strengthened The board has increased the dividend pay-out ratio policy from significantly. Palladium reached a high of USD1,277 in December 30% to 40%, reaffirming our confidence in the future of the while rhodium set an eight-year record of USD2,600, both driven business and commitment to disciplined and balanced capital by strong automotive demand. Ruthenium and iridium prices also allocation. It also reflects our differentiated strategy and portfolio of reached multi-year highs. high-quality mining and processing assets, cemented in the bottom half of the industry cost curve. We firmly believe long-term supply and demand fundamentals for PGMs remain attractive, despite fluctuating price levels. Demand
Anglo American Platinum Limited Integrated Report 2018 33 PILLARS OF VALUE: ALL PILLARS
CHAIRMAN’S LETTER CONTINUED
A second-half cash dividend of R2.0 billion or R7.51 per share has been declared to our shareholders. The dividend applies to all shareholders on the register on 8 March 2019 and is payable on Mining responsibly and sustainably 11 March 2019. This brings the aggregate 2018 dividend to to produce PGMs which improve R3.0 billion or R11.25 per share, equivalent to a 40% pay-out on peoples lives full-year 2018 headline earnings. Producing ~ 5 million ounces PGMs per annum to enable: BOARD AND MANAGEMENT AIR QUALITY AND LOWER EMISSIONS As announced on 23 October 2018, Mr Andile Sangqu, executive head of Anglo American South Africa Limited, stepped down as a non-executive director of Amplats. The board appointed DECARBONISATION – FUEL CELLS Mr Norman Mbazima as a non-executive director of the company with effect from 23 October 2018. CO CAPTURE/STORAGE Mr Ian Botha, the finance director (FD), has tendered his resignation 2 and will step down from the board on 28 February 2019. Mr Craig Miller, currently the Anglo American plc financial controller, will ENERGY STORAGE assume the role of finance director on 1 April 2019. After six years chairing the Amplats board, I will step down at the MEDICAL TECHNOLOGY ADVANCES annual general meeting in April. Norman Mbazima has been appointed chairman and Peter Mageza as lead independent director. I wish them well in their new roles as Amplats enters this new and FOOD PRESERVATION… AND MORE exciting phase of its strategic growth. I thank my fellow directors for their thoughtful input and ongoing diligence in fulfilling their duties. I also thank our CEO, Chris Griffith, the executive and management team and all employees for their contribution and commitment to the company in 2018. Together, we are re-imagining mining to improve people’s lives.
Valli Moosa Chairman Johannesburg 14 February 2019
34 Anglo American Platinum Limited Integrated Report 2018 CHIEF EXECUTIVE OFFICER’S REVIEW BUSINESS CONTEXT AND STRATEGY
OUR 2018 RESULTS ARE THE CULMINATION OF FOCUSED REPOSITIONING OVER THE PAST SIX YEARS TO COUNTER FUNDAMENTAL SHIFTS IN OUR MARKETS AND OUR INDUSTRY PGM production rose 4% TRCFR improved 34% to 3.00
Disciplined strategic execution has transformed Amplats from a Launch of AP loss-making business in 2012 to generating positive EBITDA of R14.5 billion (up 21% year on year), free cash flows in 2018 of Ventures Fund R5.6 billion and return on capital employed (ROCE) of 24%. On a with USD200 million total shareholder return basis, Amplats was the best-performing company on the JSE in 2018. Importantly, throughout this financial and operational transformation, we continued to ensure that the way in which we do business minimises harm to the environment as well as our people, •• We create value for our host communities and make a positive and supports surrounding communities – mining responsibly and impact on society. In 2018 alone, we spent R609 million on sustainably: social investment – spread across community development, •• Since 2013, we have had zero significant environmental social and labour plans as well as payments and dividends to incidents, lowered our carbon emissions by 27% and reduced community trusts. waste to landfill by 64%. A R2.5 billion investment is under way In my last report, I noted that the foundations of a solid operational to reduce sulphur dioxide emissions to global best practice performance, repositioned portfolio, healthy balance sheet and •• In the last five years, we have more than halved our total restored dividend were set, positioning Amplats strongly for a recordable case frequency rate (TRCFR). While our sustainable future. collaborative focus on safety is producing results, the tragic loss of two colleagues in 2018 has re-emphasised how critical We now have a differentiated PGM business – the undisputed it is for us to eliminate fatalities across our business – we leader in its industry – and we move on to the next phase of our must create a safe working environment by changing processes strategy (detailed on page 20) to unlock the full potential of our and, more importantly, behaviour by changing the culture of operations through our people and innovation to redefine industry- our organisation best performance in a safe and socially responsible way.
Anglo American Platinum Limited Integrated Report 2018 35 PILLARS OF VALUE: ALL PILLARS
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
COMMITTED TO ZERO HARM and expose ore tonnes, in turn enabling more consistent mining of Our safety performance in 2018 was a marked improvement on the ore tonnes over the short to medium term and reducing the need to prior year, but does not yet meet the standards we set for ourselves drawdown on ore stockpiles from 2021. or those that society and our employees deserve. On behalf of the Total PGM production at Amandelbult rose 1% to 868,800 ounces, group, I extend our heartfelt condolences to the families, friends and due to increased underground production delivered to the colleagues of the two employees (2017: six) who died in work- concentrator, primarily from Dishaba. Dishaba Mine development related incidents. Mr Johannes Maimela was fatally injured on led to a 7% increase in immediately available ore reserves 12 February 2018 after being attacked by a swarm of bees at compared with the prior year, highlighting the progress made in Amandelbult Mine; and Mr Emmanuel Segale died in a fall-of- developing Dishaba Lower at a low capital cost of R0.5 million. ground at Amandelbult’s Dishaba Mine on 18 October 2018. Production was significantly impacted in the final quarter by lower Pleasingly, the revised safety strategy and framework for a underground production delivered to the concentrator primarily comprehensive safety turnaround plan that we instituted last year is due to the section 54 stoppage after the fatality in October 2018 delivering results. The TRCFR, our key leading indicator, improved and subsequent extensive retraining of employees, as well as some 34% to 3.00 – slightly better than our target of 3.01 for 2018. impact from Eskom load shedding, and persistent high absenteeism in the final quarter. We also made encouraging progress in improving employee health in the review period. Our tuberculosis (TB) incidence rate is now Unki Mine in Zimbabwe produced a record 192,800 PGM ounces, 325 per 100,000 (2017: 582 against a national average of 781) up 16%. This reflects an increase in tonnes milled, up 10% on and the number of employee TB deaths was maintained at a low five improved underground productivity, while the 4E built-up head due to our active wellness programmes. With our HIV/Aids grade rose to 3.51g/t (2017: 3.47g/t) due to improved mining reef programmes, aligned to the UNAIDS goal of 90:90:90 by 2020 cut and reducing waste tonnes mined. The Unki smelter was (90% know their status, 90% of those infected are on antiretroviral completed in 2018, on schedule and on budget (capital investment treatment and 90% viral load suppression), 98% of our employees of R0.7 billion), and commissioning began in the third quarter. have been counselled, 88% were tested and 90% of those who are Mototolo recorded an improved performance in 2018, HIV-positive are on antiretroviral treatment. increasing production by 56% to 287,700 PGM ounces On the environmental side, construction is under way on the SO2 (2017: 184,800 ounces). Mine production achieved returned to abatement plant at Polokwane smelter to reduce emissions by over normal levels after the four-month concentrator shutdown in 2017 90% to well under regulated limits. We achieved our energy and for remedial work to restore the Helena tailings storage facility. water efficiency targets for the year and we have recorded no major Additional production was toll treated at Bokoni Mine environmental incidents (categorised as level 3 to 5) since 2013. (20,800 PGM ounces against 11,900 in 2017) from ore stockpiled during the concentrator plant shutdown. The acquisition of UNLOCKING THE FULL POTENTIAL OF OUR Glencore and Kagiso’s share of the Mototolo joint venture (JV) was OPERATIONS completed on 1 November 2018. From this date, production was We recorded another strong operational performance in 2018, treated as own-mine production (previously treated as 50% JV reflecting our ongoing focus on efficiency improvements across mined production and 50% purchase of concentrate). the portfolio. With all mines outperforming the prior year, total PGM production rose 4% to 5,186,500 ounces, comprising: Joint venture production is based on 50% of mined production. •• Platinum at 2,484,700 (2017: 2,397,500) ounces Kroondal achieved record PGM production, up 7% to •• Palladium at 1,610,800 (2017: 1,557,300) ounces. 312,200 PGM ounces on improved underground efficiencies and concentrator recoveries. Modikwa marginally increased production The portfolio of mines we own and manage changed in the review (1%) to 164,700 PGM ounces, benefiting from ore purchases from period. Effective 1 November 2018, Mototolo Platinum Mine became Mototolo which contributed 12,300 PGM ounces compared to a wholly owned operation after we bought out minority shareholders, 9,700 in 2017. The underlying mine performance was impacted by Glencore and Kagiso Platinum Ventures, with an upfront payment of a slow start to the year, due to community unrest that affected work R1.3 billion (and deferred payments detailed in the finance director’s attendance in March and a bus-arson incident in April which review). Mototolo is a mechanised, low-cost, high-quality resource, tragically resulted in the deaths of six Modikwa employees. creating another major PGM hub for Amplats by unlocking significant optionality in our adjacent Der Brochen resource, and increasing Total PGM purchase of concentrate, including 50% of JV life-of-mine to over 30 years. Mototolo’s production is included in the production, increased 13% to 2,291,900 ounces. The increase is owned and managed portfolio for two months of the review period, primarily due to including concentrate from Union following its sale with a marginal effect on comparable data. to Siyanda on 1 February 2018, partially offset by the removal of unprofitable ounces from Bokoni being placed on care and Mogalakwena had another record year by producing maintenance in 2017 (which contributed 117,000 PGM ounces in 1,170,000 PGM ounces, up 7%. Due to an optimised mine plan, 2017). From 1 January 2019, some 900,000 PGM ounces from implemented at the beginning of 2018, the pit walls of the central Sibanye-Stillwater will be under a tolling contract and therefore will pit were steepened. This, together with improved truck-and-shovel not be categorised under purchase of concentrate from third parties. performance, allowed us to move more waste tonnes in the period
36 Anglo American Platinum Limited Integrated Report 2018 BUSINESS CONTEXT AND STRATEGY
Refined PGM production decreased 6% to 4,784,900 ounces. addition to the thousands who live in company accommodation. This was primarily attributable to the planned rebuilds of Mortimer All our people have access to decent healthcare programmes. In the and Polokwane smelters, commissioning of the Unki smelter, and review period we extended our financial wellness programme, maintenance work on other processing assets, all of which resulted Nkululeko, to include a broader range of financial issues. To date, in a build-up of work-in-progress inventory. In addition, there was a this has reached around 12,000 employees via individual particularly strong refined production performance in 2017 due to consultations on financial matters, particularly debt-relief solutions. the stock-count gain (106,000 PGM ounces) and backlog of Our organisational cultural transformation journey is creating a material after the Waterval smelter run-out in 2016 (together common purpose aligned with our strategy, focused on values, totalling 236,000 PGM ounces). Refined production and sales leadership and engagement. We have made excellent progress at volumes should increase in 2019 as the backlog of work-in- managerial levels and, in 2018, the programme began addressing progress inventory from 2018 is processed in full. aspects at the lowest level in the organisation to ensure alignment. PGM sales volumes (excluding marketing activities) decreased 3% to 5,224,900 ounces on lower refined production, BUILDING SUSTAINABILITY THROUGH SOCIALLY compensated in part by a drawdown in refined inventory levels. RESPONSIBLE OPERATIONS Platinum and palladium work-in-progress inventory has risen from We are concentrating on addressing the significant legacy of around 467,000 ounces and 379,000 ounces respectively at the underdevelopment and high unemployment around our operations end of 2017 to 548,000 ounces and 447,000 ounces respectively as both a business and moral imperative. We continue to improve at the end of 2018. Work-in-progress stock levels are expected to the quality of our engagement with communities, as they ultimately normalise in 2019. grant us our social licence to operate and are key stakeholders in the longevity of our mines. PEOPLE ARE KEY TO REACHING OUR GOALS In 2018, Amplats lost no production days to community protests Our people – their skills, their passion and commitment – are around our managed operations, although the number of protests fundamental to our goals. In return, we are committed to their in the industry escalated. Key issues included lack of employment development and wellbeing in a work environment where they and procurement opportunities, and the ongoing lack of municipal can thrive and unlock their own potential. service delivery. We continued to engage with these communities, Our workforce increased by some 1,600 with the acquisition of local government officials and the police (SAPS) in an attempt to Mototolo to 24,789 at year end, although lower than the 28,692 limit the impact of these disruptions. employees at the start of the year due to the sale of Union Mine. We are committed to honouring our 2016 to 2020 social and labour Given our ongoing shift to modernisation and automation, it is plans (SLPs). Stakeholders are engaged and more involved in the important to recruit appropriate skills for our mines in addition to delivery of each SLP and each project is monitored and evaluated continued development and training of our workforce. In 2018, we to gauge its impact. Overall, our flagship projects have created over spent 6.28% of total payroll on training and development, while 1,000 jobs. More than 8,000 learners benefited from our education recruiting the best mining skills to augment our talent pool. support programme – from early childhood development to Although the repositioning process over recent years has more grade 12 levels. The SLPs, regional socio-economic development than halved our staff complement, Amplats now benefits from a or SED, Alchemy (community shareholding trust) and Zimele (an smaller, more skilled workforce which ensures we work more Anglo American initiative) strategy all form part of a broader SED efficiently, as reflected in productivity in the review period improving strategy aimed at delivering lasting benefits for host communities by 15%. around our sites. In 2018, R609 million was spent on community We also continue to make progress with transformation – a key development (R467 million on SLPs, social investments and compliance element in the South African mining industry. In 2018, payments to community trusts, as well as R142 million in the representation of designated groups at senior management community dividends. level decreased from 51% in the prior year to 50%, middle In addition, we are contributing to land and community housing management rose from 67% to 69%, junior management from challenges. For the Bokomosa project in Rustenburg, we have 80% to 82%, and women from 16% to 18%. donated land to the local municipality. In this case, our infrastructure Employee share ownership is another important element of investment of around R170 million (including a waste-water transformation and we concluded an employee share-ownership treatment works and associated water-reticulation network as plan agreement in 2018 with unions and employees. In terms of the well as over 1,000 ablution blocks) on 204 hectares of land valued agreement, employees received R9,000 in cash in 2018, in 2019 at R31 million will enable the municipality to build around they will receive R8,000 – split into R4,000 cash and R4,000 in 4,000 houses for the community on serviced stands. We donated a shares, and in 2020 they will receive R8,000 (again split as R4,000 further 262 hectares, valued at R85 million, to the municipality and cash and R4,000 in shares). The vesting period for the share portion Alchemy Rustenburg community trust, for housing as well as a care is over two years, ie 2021 and 2022. centre for the elderly and fresh produce garden. We are striving to be part of a different narrative on land by demonstrating that there In line with our values, we work hard to ensure our company offers are alternatives to land issues in South Africa. Expropriation without meaningful employee benefits. In recent years, hundreds of our compensation need only be a last resort. people have benefited from a range of housing schemes, in
Anglo American Platinum Limited Integrated Report 2018 37 PILLARS OF VALUE: ALL PILLARS
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
Our focus on local supplier development ensures our host Other market-development initiatives are detailed in our communities benefit from mining. In 2018, 74% of our supplementary report. discretionary spend was with black-owned and black-empowered Strategy update suppliers. We awarded 62 new contracts to host community With the first phase of our strategy successfully delivered (page 20), SMMEs with an estimated value of R1,2 billion. evolve to the next phase. Amplats now has a differentiated value REGULATORY DEVELOPMENTS proposition through: During the year, and as noted by the chairman, the minister of •• The quality of our long-life assets from which we continually mineral resources, Gwede Mantashe, withdrew proposed strive to extract full value amendments to the MPRDA, allowing the mining industry to be •• Proven capital discipline, resulting in balance sheet strength governed by the Act as is and removing a level of uncertainty. and the flexibility to respond to opportunities through the cycle •• Ensuring the sustainability of our business by spearheading In September, the minister gazetted the third mining charter market development to grow demand for PGMs, advancing (known as MC18) for implementation. MC18 is a major prioritised project studies to maintain optionality, and improvement on earlier versions and brings welcome clarity on modernising our organisation. some highly contentious issues. The chairman has noted our remaining concerns with the charter. We will achieve our value proposition through the next phase of value delivery, divided into three pillars: In the year ahead, we will complete our implementation plan •• Extracting the full potential from our operations, through our (by 1 September 2019) to comply with the requirements of the people and innovation new charter. •• Investing in our core portfolio that delivers industry-leading cash Market conditions see PGMs collectively in a deficit flow and returns Stronger palladium, rhodium and ruthenium prices drove the •• Investing in the development of the market for PGMs to US dollar basket price up 13% to USD2,219/ounce. A constant increase demand. rand:dollar exchange rate in 2018 resulted in the rand basket price Repositioning the portfolio in recent years has enabled us to focus also increasing by 13% year on year. The platinum price ended the on our most competitive assets, largely open-pit and more year down 15% at USD794 per ounce, averaging USD880 (2017: mechanised operations which will result in higher margin USD950) on slightly lower demand from the automotive sector, production, a smaller and more highly skilled workforce, safer limited support from the gold price and macro-economic pressures operations and a less complex organisation. The detail on key M&A from US/China trade-tariff concerns. activities in 2018 appears in the financial review, but in summary: The other PGMs had a more impressive year. Contributing factors •• On 1 February 2018, the sale of our 85% interest in Union Mine and movements in the PGM market are detailed in our to Siyanda Resources became effective. The upfront disposal supplementary report and summarised by the chairman. proceeds of R400 million was received on 1 February and Overall, we view the medium-term demand outlook as positive management control was handed over. Other key commercial across the metals we produce: terms of the agreement included a deferred consideration based •• Mixed outlook for PGM markets, with platinum set to on 35% of cumulative positive distributable free cash flow to be underperform (despite strong growth in industrial demand offset paid annually as an earn-out for a period of 10 years from the by stabilising jewellery demand) and palladium to remain in effective date. The maximum cap on the deferred consideration deficit, driven by strong automotive demand is R6 billion. •• Demand for palladium and rhodium, dominated by the gasoline As detailed from page 58, our core operations will benefit from autocatalyst sector, is rising on higher sales and tighter emissions focused strategies, dedicated management attention and technical rules in many countries expertise, as well as disciplined capital allocation. •• Further out, credible progress in developing the hydrogen economy and fuel cells could create a new sizeable demand Solid financial results segment for platinum. Amplats delivered a strong financial performance in 2018, detailed in the finance director’s report on page 40. Salient features include: In addition to managing our mines cost-effectively and profitably, •• EBITDA of R14.5 billion, 21% above 2017 largely due to higher we continue to focus on developing the market for platinum. revenue, driven by higher prices A highlight of the year was the launch of AP Ventures, with matching •• Return on capital employed (ROCE) of 24% and headline USD100 million commitments (equivalent to R1.3 billion) from earnings of R7.6 billion (R28.93 per share) up 95% on 2017 Amplats and the Public Investment Corporation. AP Ventures will •• Project and stay-in-business capital expenditure of R4.7 billion support the growth of PGM technologies and increase demand for (net of insurance receipts) was within market guidance. these metals by facilitating the application of cutting-edge Capitalised waste stripping of R1.5 billion was higher than the technological advances and broad innovative thinking to address prior year and budget due to the revised mining strategy at society’s major challenges. As an independent structure, AP Mogalakwena Ventures will be better positioned to attract outside investment to •• Underlying unit costs were up 5% year on year, with the benefits scale its activities. It is also a clear example of using collaborative of increased mined production, being more than offset by input partnerships to connect people for the betterment of the industry.
38 Anglo American Platinum Limited Integrated Report 2018 BUSINESS CONTEXT AND STRATEGY
cost inflation of 6.6%, which was almost 2% above CPI. This was Operational outlook due to above-inflation increases for labour, diesel, explosives and •• PGM production guidance (M&C) is 4.2 to 4.5Moz of PGMs coal. The unit costs increase was 8% when including accounting in 2019, including a platinum outlook of 2.0 to 2.1Moz and movements in Mogalakwena’s ore and waste capitalisation palladium outlook of 1.3 to 1.4Moz. The reduction against 2018 •• Net cash of R2.9 billion, compared to net debt of R1.8 billion at reflects Sibanye-Stillwater material changing to a tolling contract 31 December 2017. Excluding the customer prepayment, net from 1 January 2019 debt is R3.2 billion, and net debt:EBITDA is 0.2 •• Refined production will be higher at 4.6 to 4.9Moz of PGMs •• Against a higher dividend pay-out ratio policy (now 40%), the for 2019, including platinum of 2.2 to 2.3Moz and palladium of board declared an increased second-half cash dividend to take 1.4 to 1.5Moz. Refined production is higher than M&C production the aggregate 2018 dividend to R3.0 billion or R11.25 per share. due to refining work-in-progress inventory that built up after maintenance on Mortimer and Polokwane smelters in 2018 OUTLOOK •• Sales volumes will be in line with refined production. Market outlook The three major PGMs – platinum, palladium and rhodium – should Financial outlook again be in combined deficit in 2019. Primary mine supply should •• Unit cost guidance is between R21,000 and R22,000/Pt oz remain flat, while tightening emissions regulations are likely to (M&C) boost demand for palladium and rhodium in the light duty and •• Total capital expenditure guidance for 2019 (excluding capitalised platinum in the heavy-duty sectors. waste stripping) is between R5.7 billion and R6.3 billion. •• Platinum – is expected to be in a modest surplus in 2019. The Capitalised waste stripping guidance is R2.0 billion to R2.2 billion. outlook for gross global automotive demand is more positive in I thank my executive team and all our people for their hard work in 2019, with some growth possible. While the diesel engine’s share producing a set of results we can be proud of. In particular, I thank of the European light vehicle market is expected to decline our finance director, Ian Botha, who resigned in September 2018 further, additional demand from the heavy-duty sector in China and stayed on to finalise these results. Our executive head of and India, due to stricter emission regulations, could limit the projects and SHE, Indresen Pillay, resigned in August, while combined automotive demand reduction. Industrial demand is Vishnu Pillay – executive head of joint ventures – retired in August. likely to remain strong and the jewellery demand outlook remains Given our smaller JV portfolio, this executive position falls away, and mixed. There are some positive signs in China that jewellers remaining JV operations will report to the executive head of mining. could drive higher platinum sales, but 2019 could still see a Mr Prakashim Moodliar has been appointed by the executive modest decline in demand before the market finally stabilises. In committee as the executive head: projects and will start on 1 March contrast, Indian demand should increase further, and a robust 2019. performance in other key jewellery markets is expected. Investment demand depends on price movements and volatility, As announced on 23 October, Mr Andile Sangqu, executive head and is expected to be positive, aided by continuing market of Anglo American South Africa Limited stepped down as non- development work from the World Platinum Investment Council executive director and Mr Norman Mbazima was appointed as a •• Palladium – is likely to be in a material deficit in 2019. non-executive director. Automotive demand is likely to increase, even with little or no The chairman, Mr Valli Moosa, who has served as a director for the growth in vehicle sales, as the average vehicle size increases and past 10 years, will retire from the board at the AGM on 17 April emission rules tighten. Although palladium is trading at a 2019. Mr Norman Mbazima will take over as chairman. substantial premium to platinum, there is little evidence of intensive efforts to replace palladium with platinum in any Craig Miller, currently the Anglo American plc financial controller, gasoline catalytic converters. Even if this R&D process were to will assume the role of finance director on 1 April 2019. start in earnest in 2019, gross automotive palladium demand Mr Peter Mageza, who has been a member of the board for the past would be likely to rise over the coming year. Mine production five years, has been appointed as the lead independent director. should be relatively flat year on year, while more palladium will be recovered from recycling In closing, I assure our stakeholders we are well on the path to •• Rhodium – demand is likely to be steady in 2019. Although unlocking our full potential and a sustainable future. vehicle sales are unlikely to grow during the year, tighter emission rules and rising vehicle sizes should add incremental automotive demand. Industrial demand could fall back due to some price sensitivity in the glass sector. Primary supplies are expected to remain flat, while the volume of metal recycled should climb in Chris Griffith 2019, with rhodium likely to remain in a small fundamental surplus. Chief executive officer Johannesburg 14 February 2018
Anglo American Platinum Limited Integrated Report 2018 39 PILLARS OF VALUE: FINANCIAL, COST
FINANCIAL REVIEW
DELIVERING VALUE, WHILE OPERATIONS PERFORMED STRONGLY
Dividend payout ratio increased Headline earnings to 40% of R7.6 billion R3.0 billion or R11.25 per share for 2018 rose 95% from 2017 ROCE of 24% Net cash of R2.9 billion from net debt of R1.8 billion in 2017
Amplats financial performance against strategy
DEVELOPING THE MARKET EXTRACTING THE FULL INVESTING IN OUR CORE FOR PGMS POTENTIAL FROM OUR PORTFOLIO OPERATIONS THROUGH OUR •• •• Anglo Platinum Marketing Limited PEOPLE AND INNOVATION Acquired remaining interests in committed to invest USD100 million Mototolo Mine joint venture (JV) (R1.3 billion) in two PGM market •• Net sales revenue up 14% to •• Sale of Union Mine to Siyanda development funds R74.6 billion Resources •• Headline earnings of R7.6 billion, •• Sale of equity in Royal Bafokeng up 95% Platinum Limited (RB Plat) •• Strong balance sheet – net cash •• Sale of 33% interest in Bafokeng of R2.9 billion (R4.7 billion Rasimone Platinum Mine joint improvement on 2017) venture (BRPM JV) to Royal •• 2018 dividend declared of Bafokeng Platinum Limited R11.25 per share, or R3.0 billion
40 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
OVERVIEW R1.8 billion at 31 December 2017. This was after a cash dividend to Amplats delivered another strong financial performance in 2018, shareholders of R1.9 billion and reflected enhanced operating free further strengthening its balance sheet to end the year with net cash cash flow of R5.6 billion and net proceeds on asset sales of of R2.9 billion. Work on upgrading the portfolio continued and is R0.1 billion. The customer prepayment increased by R1.5 billion delivering value, while operational performance improved and due to a weaker rand at the end of 2018 compared to increased underlying cash flow in 2018. December 2017 as well as higher palladium and rhodium prices, Further progress has been made on delivering the ‘value not bringing the total customer prepayment at 31 December 2018 volume’ strategy and repositioning our portfolio, including: to R6.1 billion. •• Sale of Union Mine to Siyanda Resources on 1 February 2018 Headline earnings rose 95% to R7.6 billion (2017: R3.9 billion), for upfront cash of R0.4 billion, deferred cash of 35% of net with headline earnings per share (HEPS) of 2,893 cents cumulative positive free cash flow for 10 years and the (2017: 1,482 cents). The higher earnings reflect a higher dollar purchase-of-concentrate agreement for seven years, with basket price and improved operational performance. Headline a toll arrangement from year 8 earnings includes a post-tax attributable net gain of R0.5 billion, •• Disposal of our 11.7% shareholding in RB Plat for R0.5 billion which includes the remeasurement of deferred consideration •• Sale of our 33% interest in the BRPM JV to RB Plat effective on relating to the disposal of Rustenburg. We recorded attributable 1 December 2018 (for accounting purposes) for a total of post-tax net losses of R1.5 billion impacting basic earnings. R1.9 billion (R0.3 billion upfront and R1.6 billion deferred, to be For a more comprehensive account of the company’s financial settled in three equal tranches after 1.5 years, 2.5 years and position and performance, this review should be read in conjunction 3.5 years from completion date), together with a R0.3 billion with the annual financial statements for 2018 at repayment of funding to BRPM from signature date to effective www.angloamericanplatinum.com. date. The sale allows Amplats to focus its capital allocation on own-managed mines and projects. Amplats will retain its right to Headline earnings per share (R/s) purchase 50% of the BRPM JV’s concentrate for the life-of-mine •• Acquisition of Glencore’s 40.2% and Kagiso’s 9.8% shareholding 28.93 in the Mototolo JV. The upfront consideration to Glencore was 27.21 R1.0 billion and a deferred consideration to be settled monthly over six years based on rand PGM prices over the Mototolo JV life-of-mine to 2024 (with a fair value of R0.9 billion). A total purchase consideration of R0.3 billion was paid to Kagiso, with 14.82 no further sums payable. The transaction unlocks significant 17.83 optionality for the company in its adjacent wholly owned Der Brochen resource, and will increase the life-of-mine to over 7.07 30 years, creating material value for Amplats. 9.43
Amplats strengthened its balance sheet and ended the year with 1.72 net cash of R2.9 billion, a R4.7 billion improvement from net debt of (2.33) (3.01) 2016 2017 2018
■ Underlying ■ Once-off accounting entries FINANCIAL PERFORMANCE Key financial indicators underpinning our operating performance in the past year were: % R million 2018 2017 change Net sales revenue 74,582 65,670 14 Cost of sales 63,286 56,578 12 EBITDA 14,503 11,985 21 EBIT 10,335 7,892 31 Headline earnings 7,588 3,886 95 Cash generated from operations 17,345 15,942 9 Capital expenditure excluding capitalised waste stripping and interest 4,711 3,960 19
Revenue Net sales revenue rose 14% to R74.6 billion from R65.7 billion in 2017, on the back of a 13% higher US dollar basket price of USD2,219 per platinum ounce sold (compared to USD1,966 in 2017), partly offset by lower volumes sold. The achieved average exchange rate of R13.33 was flat against the prior year. The average US dollar sales price achieved on all metals improved, except for platinum which was USD871 per ounce compared to USD947 in 2017. Palladium was up 17%, rhodium up 101% and nickel up 26%. The rand basket price improved by 13% to R29,601 per platinum ounce sold (2017: R26,213).
Anglo American Platinum Limited Integrated Report 2018 41 PILLARS OF VALUE: FINANCIAL, COST
FINANCIAL REVIEW CONTINUED
% R million 2018 2017 change Gross sales revenue by metal 74,582 65,688 14 Platinum 28,108 31,590 (11) Palladium 20,934 18,421 14 Rhodium 9,401 4,242 122 PGM (5E+AU) 64,201 58,343 10 Nickel 4,172 3,566 17 Chrome 1,855 2,157 (14) Other 1,561 1,622 (4) Trading 2,793 – 100 Commission paid – (18) (100) Net sales revenue 74,582 65,670 14
Metal price movements (1 January 2018 to 31 December 2018) Indexed metal price (1 January 2018 = 1) YTD 2018 31 December closing % versus 1.6 versus January 2018 YTD 2017 open (in year) achieved 1.5 Rhodium 45% 101% 1.4
1.3 Rand basket price 26% 13% 1.2 Palladium 19% 17%
1.1 USD basket price 8% 13%
1.0 Gold (2%) 1% Nickel (12%) 26% 0.9 Chrome (23%) 1% Platinum (14%) (8%) 0.8 Copper (18%) 3%
0.7 Rand: USD 17% 0%
January February March April May June July August September October November December
Sales of refined PGMs, excluding third-party purchases of refined metals, declined 3% to 5,224,900 ounces, platinum declined 3% to 2,424,200 ounces and palladium decreased 4% to 1,513,100 ounces, due to lower refined production after the Mortimer smelter rebuild, Polokwane smelter ring repair and other process maintenance in 2018. The prior year also had the benefit of additional sales volumes, due to the stock-count gain and additional refined material following the build-up of work-in-progress inventory after the Waterval smelter run-out in 2016. Rhodium sales increased 9% to 317,400 ounces while sales of chrome declined by 10% on disposal of the Masa chrome recovery plant as part of the Union Mine disposal. PGM sales from third-party purchased metal added 223,100 ounces (94,000 platinum ounces, 124,500 palladium ounces and 4,600 gold ounces).
42 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
% R million 2018 2017 change Total metal sold* Platinum 000 oz 2,424 2,505 (3) Palladium 000 oz 1,513 1,572 (4) Rhodium 000 oz 317 290 9 PGM (5E+AU) 000 oz 5,225 5,382 (3) Nickel sold t 23,943 25,411 (6) Chrome sold t 834,682 927,732 (10) Average market price achieved Platinum USD/oz 871 947 (8) Palladium USD/oz 1,029 876 17 Rhodium USD/oz 2,204 1,094 101 PGM (5E+AU) USD/oz 921 813 13 Nickel USD/t 12,972 10,314 26 Chrome USD/t 178 177 1 Total revenue per platinum oz sold USD/oz 2,219 1,966 13 Average exchange rate R/USD 13.33 13.33 – Total revenue per platinum oz sold R/oz 29,601 26,213 13 Total revenue per PGM (5E+AU) oz sold R/oz 13,734 12,198 13 * Excludes sales from the purchase of refined metal.
Revenue per metal
10% 9% 2% Platinum 3% 6% 5% Palladium Rhodium 7% 48% 13% 2018 39% 2017 Nickel Chrome Other 28% 30%
Costs from BRPM, purchases of third-party refined metal, as well as a Cost of sales rose 12% from R56.6 billion in 2017 to R63.3 billion 13% higher rand basket price than 2017. This was partly offset by due to increased production volumes, lower ore stockpile lower purchases from Bokoni Mine after it was placed on care and capitalisation and input cost inflation. Following the sale of the maintenance in the second half of 2017 and lower output from the Union operations in February 2018 to Siyanda, Amplats has higher Sibanye Rustenburg Mine. purchase-of-concentrate costs and lower on-mine costs due to Inventory movements increased due to work-in-progress build-up purchasing concentrate from Siyanda. during process operations maintenance, and the ore stockpile On-mine costs (mines and concentrators) reduced by R0.8 billion capitalised was lower than prior year. to R26.1 billion due to the exit of Union, partly offset by input cost Improved truck-and-shovel performance at Mogalakwena enabled inflation and increased volumes at retained operations. us to move more waste, creating the potential to expose more ore Processing costs rose by 10% in 2018 on higher input costs, in future periods. Improved concentrator performance resulted in such as diesel, electricity and coal as well as commissioning the us building up lower ore stockpiles than expected. The ore stockpile Unki smelter. capitalised was R0.5 billion, which was below previous guidance of R1.2 billion. Costs associated with the purchase of concentrate increased to R29.2 billion from R20.8 billion in 2017 due to production purchased from Siyanda in respect of Union Mine, increased output
Anglo American Platinum Limited Integrated Report 2018 43 PILLARS OF VALUE: FINANCIAL, COST
FINANCIAL REVIEW CONTINUED
Other costs increased 2% from R3.4 billion in 2017. This was primarily due to higher transport-of-metal costs, given higher costs for transporting chrome and an increase in royalties due to higher revenue.
COST OF SALES ANALYSIS % R million 2018 2017 change On-mine 26,149 26,932 (3) Processing 8,541 7,784 10 Smelting 4,261 3,914 9 Treatment and refining 4,280 3,870 11 Movement in metals and consumables (3,591) (515) 597 Movement in ore stockpiles (466) (1,761) (74) Purchase of concentrate 26 362 20 921 26 Trading activities 2,850 (158) (1,904) Other costs 3,441 3,375 2 Cost of sales 63,286 56,578 12
The unit cost of R20,684/Pt oz was up 8% on 2017. Excluding the Earnings before interest, taxation, depreciation and impact of lower ore stockpiles capitalised and increased capitalised amortisation (EBITDA) waste, unit cost increased 5% year on year, mainly due to input cost EBITDA rose 21% from R12.0 billion in 2017 to R14.5 billion. inflation of 6.6% (2% above CPI), environmental rehabilitation cost Uncontrollable items increased comprising CPI, US dollar metal credits in 2017 not recurring in 2018 and the employee share prices and the ZAR/USD exchange rate increased earnings by a net scheme payment which began in 2018, partly offset by higher R4.2 billion, with foreign exchange gains (compared to losses in mined production. 2017) contributing R0.3 billion and stronger metal prices contributing R5.4 billion, partially offset by CPI of R1.5 billion. The all-in sustaining unit cost for 2018 was USD756 per platinum ounce against an achieved price of USD871 per ounce. Earnings were reduced by a lower increase in the measured value of ore stockpiles (R1.3 billion) and the stock-count loss in 2018 of The focus for 2019 remains on unit cost control. Unit cost guidance R0.5 billion compared to the stock-count gain in 2017 of R0.9 billion for 2019 is R21,000 to 22,000, up 1-6% on 2018. (net impact of a decrease of R1.4 billion). This was partially offset by Unit cost (Rand per platinum ounce produced) improved costs, which increased earnings by R0.6 billion, as well as the benefit of Bokoni being on care and maintenance, resulting in +5% +8% lower losses incurred for associates (R0.3 billion).
EBITDA (Rbn) 1,803 ESOP 127 (565) 1,026 20,684 Above 677 (783) 5.4 CPI 20,223 Rh 0.3 2.6 (1.5) 16.2 (1.4) Stock count CPI 999 Pd 2.1 14.5 (1.3) Ore 0.3 1.3 0.6 19,203 Ru 12.0 Ni 0.7 Pt (1.5)
2017 Costs Production 2018 Reduced Increased 2018 ore capitalised capitalisation waste
2017 Price Currency CPI Stock Costs Associates 2018 count and and ore volume capitalisation
44 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
The EBITDA margin achieved was 20% (2017: 18%), made up of Capital expenditure (Rbn) own mining operations of 32% (2017: 32%), JV operations of 27% (2017: 20%) and purchase of concentrate of 10% (2017: 9%). 5.7 – 6.3 0.8 EBITDA margin (%) 4.7 0.4 4.0 1.5 – 1.8 32 1.0 0.6
27
3.3 3.3 3.4 – 3.7 20
10 2017 2018 2019 guidance
■ ■ ■ SIB Projects SO2 abatement plant
POC JV mined share Own mines Working capital We continue to focus on optimising working capital levels. Trade Capital expenditure working capital at 31 December 2018 was R4.9 billion (equivalent Disciplined capital expenditure remains a priority, aimed at to 15 days) compared to R6.2 billion at 31 December 2017 maintaining asset integrity and adding value, not volume. (26 days). The decrease reflects higher trade creditors Capital expenditure for 2018, excluding capitalised interest and (R3.3 billion) due to higher payables for the purchase of capitalised waste stripping, increased 18% to R4.7 billion (net concentrate (on higher volumes, including production purchased of insurance receipts) from R4.0 billion in 2017. from Siyanda, as well as higher rand metal prices), an increase in the customer prepayment of R1.5 billion (due to a weaker closing Stay-in-business (SIB) capex was flat on 2017 at R3.3 billion. exchange rate than 2017 and higher prices) and lower trade The SIB governance process remains rigorous, ensuring that SIB debtors of R0.6 billion (two days in 2018 compared to five days in capital is sustainable and focused on safety, enhancing business 2017). This was partially offset by a temporary build-up in continuity and regulatory compliance. SIB capital is expected to be work-in-progress metal inventories totalling R3.5 billion because of R3.4 billion to R3.7 billion in 2019. planned maintenance at our processing assets, and measured ore stockpiles increasing R0.5 billion. As previously guided, the SO2 abatement plant for Polokwane smelter began in 2018 (R0.4 billion) and this will continue in 2019 Working capital (Rm) and 2020. Mortimer SO2 abatement project will begin in 2021. 4.1 Our focus is to invest in low-capex, fast-payback, value-accretive Ore capitalisation 0.5 Finished goods projects. Project capital was at R1.0 billion in 2018 and related to 0.1 (1.9) WIP Amandelbult chrome plant modules 3 and 4, Unki smelter and (to be 3.5 released in (1.4) Union POC closing out the Mogalakwena North concentrator optimisation. 2019) 6.2 (3.3) (0.6) Project capital in 2019 is estimated to be R1.5 billion to R1.8 billion (1.5) 4.9 for low-capital, fast-payback projects (such as Tumela 15E, the copper leach circuit at the BMR, debottlenecking at Unki and Mototolo and chrome projects at Amandelbult, Modikwa and Mototolo) and on projects (such as technology enhancements and digitisation) to achieve and then exceed operating benchmark performance. 2017 Inventory Trade Debtors Customer 2018 creditors prepayment Waste tonnes mined increased from 69Mt in 2017 to 71Mt in 2018 and the cost of mining 36Mt was capitalised against a capitalisation of 20Mt in 2017. Capitalised waste stripping was marginally above guidance at R1.5 billion as improved truck-and-shovel performance at Mogalakwena is allowing us to move more waste, creating the potential to expose more ore in future periods. 2019 capitalised waste stripping guidance is R2.0 billion – R2.2 billion.
Anglo American Platinum Limited Integrated Report 2018 45 PILLARS OF VALUE: FINANCIAL, COST
FINANCIAL REVIEW CONTINUED
2018 2017 Rm Days Rm Days Metals and consumables 20,381 89 16,729 83 Ore stockpiles 2,256 12 1,761 11 Trade debtors 554 2 1,188 5 Trade creditors (12,108) (59) (8,837) (50) Customer prepayment (6,127) (29) (4,623) (23) Total trade working capital 4,957 15 6,217 26
Platinum and palladium work-in-progress inventory has risen from Investor relations activity and share price around 467,000oz and 379,000oz respectively at the end of 2017 Investor relations engage with the market to enhance corporate to 548,000oz and 447,000oz respectively at the end of 2018. value through effective communication. Engaging with the market Work-in-progress stock levels are expected to normalise in 2019. includes key stakeholders including buy-side and sell-side analysts, In 2018, Amplats had a stock-count loss of R0.5 billion (2017: institutional investors and potential investors. Interaction and stock-count gain of R0.9 billion), with the benefit of a 26,000 oz communication with the market has been key to establish a track platinum stock-count gain, valued at R0.2 billion, being offset by record of delivery of the restructuring and repositioning of the stock-count losses of 16,000 palladium oz, 19,000 rhodium oz portfolio and effective execution of the strategy. and 3,000 tonnes of nickel, valued at R0.7 billion. Investor and analyst sentiment towards Amplats has been positive, Cash flows and net debt with the company’s differentiated value proposition attracting new We have a strong balance sheet. We moved from net debt of institutional and long only investors. The strong balance sheet, R1.8 billion at the start of the year to net cash of R2.9 billion. This was return to a cash dividend paying position and value-accretive supported by operations generating cash of R14.2 billion, R1.5 billion growth optionality at Mogalakwena have resulted in a rerating of from the customer prepayment, and net proceeds of R0.1 billion from the share price. Amplats was the top-performing share price on asset disposals and acquisitions. These cash flows were used to fund the JSE in 2018, up 52%, outperforming peers, the JSE Platinum capital expenditure and capitalised waste stripping of R6.2 billion; index and the JSE All Share index. The share price increased from return R1.9 billion to shareholders as dividends; pay taxation of R353/share to R537/share on 31 December 2018. R1.8 billion; settle interest of R0.6 billion to our debt providers; and In addition to the focus on a greater understanding of the Amplats contribute R0.6 billion to funding our joint venture and associate strategy, the investor relations team sought to increase the operations, of which R0.2 billion was for Bokoni. awareness of areas of demand for platinum in China by facilitating Net debt (Rbn) a trip for analysts and investors. The trip intended to highlight both the trends in the Chinese jewellery market, but also the government and private sectors’ ambition to grow the technology
0.1 and infrastructure of fuel cell electric vehicles. The impact was a 1.5 positive shift in sentiment from the market, which had previously
(6.2) believed fuel cell electric vehicles were likely to only be a long-dated source of demand.
14.2 Investor relations manage communication through specific (2.4) reporting periods, such as annual and interim results presentations, (0.6) as well as production updates, disposal and acquisition (1.9) 2.9 announcements, trading updates and any material information on the company through JSE SENS announcements. Roadshows and attendance at opportunistic conferences allow for further engagement with key stakeholders, and these focus on both (1.8) emerging market and resource specialists. 31 December Cash Customer Net Capex Cash tax Investments Dividend 2018 2017 flow prepayment proceeds and and in from on asset capitalised net interest associates The shareholder base comprises both domestic and foreign operations sales waste paid and funding stripping institutional investors, individuals, pension and provident funds, hedge funds, banks, nominee and finance companies, trust funds and insurance companies. The shareholding of Anglo South Africa Excluding the customer prepayment of R6.1 billion (which will be Capital Proprietary Limited was 77.56%. Excluding the ownership settled with metal), net debt is R3.2 billion and net debt to EBITDA from the parent company, the geographical split of the shareholder is a strong 0.2. Liquidity headroom is at R23.4 billion, comprising base has evolved over the last number of years from being a both undrawn committed facilities of R14.2 billion and cash of predominantly South African-based shareholder base, to a growing R9.2 billion. This is comfortably within our debt covenants. investor base from the UK and North America.
46 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
Share price versus peers (last 12 months)
160 52%
140
120 13%
100 (5%)
(17%) 80
(34%) 60 (40%)
40 January February March April May June July August September October November December 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 ■ Anglo American Platinum ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Peer 4 ■ Peer 5
Dividends The total consideration comprises an upfront amount received of Given the board’s confidence in the underlying operational cash R0.6 billion (made up of R0.3 billion cash proceeds and R0.3 billion generation, and importantly the company’s ability to pursue both repayment of funding provided to BRPM from signature to effective increased dividends to shareholders and growth (in particular at date) and R1.6 billion deferred consideration, which will be settled Mogalakwena), the board has increased the dividend pay-out ratio in three equal tranches after 1.5 years, 2.5 years and 3.5 years as policy from 30% to 40% of headline earnings. escalated over the settlement period. The deferred consideration may be settled in cash or in an equivalent value of RB Plats shares. We have declared a second-half cash dividend of R2.0 billion or R7.51 per share to our shareholders. The dividend applies to all The sale has given rise to a post-tax impairment loss of R0.9 billion, shareholders on the register on 8 March 2019 and is payable on excluded from headline earnings. 11 March 2019. This brings the aggregate 2018 dividend to Acquisition of Mototolo R3.0 billion or R11.25 per share, equivalent to a 40% pay-out on On 1 November 2018, the company acquired Glencore’s 40.2% full-year 2018 headline earnings. and Kagiso’s 9.8% interests in the Mototolo JV. The consideration SIGNIFICANT ACCOUNTING MATTERS comprises an upfront payment of R1.3 billion and deferred Completed sale of Union Mine payments of R12.6 million per month from November 2018 to On 1 February 2018, the sale of our 85% interest in Union Mine Glencore for 72 months. Top-up payments (depending on the PGM to Siyanda Resources became effective. Amplats realised an price) and additional tax gross-up payments will be paid in January attributable, after-tax loss on disposal of R0.8 billion which, together each year until 2024, with a final top-up payment in November with prior impairments recognised, brings the total attributable, 2024. The deferred consideration is carried at fair value of after-tax loss on divesting from this operation to R1.8 billion. R0.9 billion. The fair value of Mototolo was based on the existing This is excluded from headline earnings. Amplats expects to extract footprint, excluding synergies/improvements arising from the value in future from the continuing purchase of concentrate/toll utilisation of the acquired Mototolo infrastructure on the refining contracts with Siyanda, utilising capacity in the group’s Der Brochen Triangle. This fair value is therefore provisional and processing operations. will be finalised in 2019. Sale of investment in RB Plat Investment in AP Ventures On 24 April 2018, Amplats disposed of a 9.2% shareholding On 17 July 2018, we announced that Anglo Platinum Marketing (17.3 million shares) in RB Plat for R0.4 billion. The sale of the Limited had subscribed for interests in two UK-based venture company’s residual 2.5% shareholding was completed on capital funds, with a total aggregate commitment of 7 August 2018, realising net proceeds of R0.1 billion. The disposal USD100 million. Our commitment to the funds is matched by a resulted in a total loss of R53 million. There was no earnings impact USD100 million commitment from South Africa’s Public Investment as the investment was classified at fair value through other Corporation (PIC). Amplats and the PIC comprise the limited comprehensive income. partners with 49.5% each, and 1% held by general partners. In December 2018, Mitsubishi Corporation became the third Completed sale of investment in BRPM Limited Partner of AP ventures, further endorsing the funds’ On 4 July 2018, Amplats entered into a binding sale-and-purchase mandate. agreement with RB Plat for our 33% interest in the BRPM JV. The sale was effective from 1 December 2018.
Anglo American Platinum Limited Integrated Report 2018 47 PILLARS OF VALUE: FINANCIAL, COST
FINANCIAL REVIEW CONTINUED
Sale of other investments Equity-accounted losses of R81 million were recognised in the The investments in Altergy Systems, Hydrogenious Technologies, current year on Bokoni owing to the capitalisation of loan funding Food Freshness Technology, Greyrock Energy, United Hydrogen and to the investment. This is included in headline earnings. HyET Holding with a carrying amount of R0.4 billion were sold to Amplats had further provided funding to Atlatsa to fund care-and- AP Ventures on 20 September 2018. The total fair value of the maintenance expenditure. A further related impairment of investments at the date of sale was R0.7 billion. A post-tax profit of R110 million was recognised in the current year, and is included R0.2 billion was recognised on disposing of the equity-accounted in headline earnings. investment in Hydrogenious Technologies, which is excluded from headline earnings. The remaining difference between the proceeds Key factors that will affect future financial results and carrying amounts of the investments at fair value (R2 million loss) Inflation and cost escalation was recognised directly in other comprehensive income. The We recorded input cost inflation of 6.6% in 2018, which will remain cumulative fair value gains of R52 million were transferred to a challenge in 2019. While some costs have been mitigated by retained earnings. restructuring the company and implementing various initiatives, inflationary pressures from wage increases (on average 6.7% in Change in estimate of quantities of inventory most recent three-year wage agreement) and electricity remain. In the current period, the company changed its estimate of the Further initiatives have been identified to reduce the impact of costs quantities of inventory based on the outcome of a physical count on the business and we expect the unit cost per platinum ounce of in-process metals. The group runs a theoretical metal inventory produced to be between R21,000 and R22,000 in the year ahead, system based on inputs, the results of previous counts and outputs. up 1% to 6% on 2018. As in-process inventories are contained in weirs, pipes and other vessels, physical counts only take place once a year, except in the Financial outlook Precious Metals Refinery, where the physical count is usually The global economic outlook remains uncertain, with volatility conducted every three years. This change in estimate had the in metal prices and exchange rates expected to continue. effect of decreasing the value of inventory disclosed in the financial Management’s efforts to reposition the portfolio, remove loss- statements by R0.5 billion (31 December 2017: increase of making ounces, implement strict cost control and focus on R0.9 billion). This results in recognising an after-tax loss of operational efficiencies should enhance margins and generate R0.3 billion (31 December 2017: after-tax gain of R0.7 billion). sustainable cash flow. Capital discipline will continue, with capital expenditure projected at R5.7 billion to R6.3 billion, of which Change in estimate of Rustenburg deferred consideration R3.4 billion to R3.7 billion will be on sustaining capex to maintain The group’s sale of Rustenburg Mine was completed on asset integrity and meet compliance requirements. 1 November 2016. The present value of the deferred consideration was recognised as a level 3 financial asset at fair value through profit The company expects to produce 4.2 million to 4.5 million PGM or loss. Remeasurements arising from changes in estimates of cash ounces in 2019 and sell 4.6 million to 4.9 million PGM ounces. flows, as well as unwinding of the discount, are included in interest My sincere gratitude and appreciation to the Amplats finance team income and expense. The estimated deferred consideration cash for their ongoing support and diligence over yet another busy year. flows were updated in December 2018 after considering the cash After almost four years as finance director, and with a strengthened flow estimates of the Rustenburg operations. This has given rise to balance sheet, structurally lower working capital and major business a post-tax increase of R0.7 billion (31 December 2018) in the restructuring successfully executed, I have resigned and will be present value of the deferred consideration, and the recognition relocating with my family abroad. My tenure at Amplats has been of a gain in profit or loss, included in headline earnings. This very rewarding professionally and I had the privilege of working with adjustment is largely a consequence of the company no longer an exceptional board and management team. expected to have to make capital contributions to Sibanye-Stillwater for the years ended 31 December 2017 and 2018. Impairment of assets and investments Equity investments in Atlatsa and Bokoni, and associated loans The company has a 22.76% shareholding in Atlatsa and a 49% Ian Botha shareholding in Bokoni (equity accounted as an associate). On Finance director 21 July 2017, Atlatsa announced that it would place Bokoni Mine on care and maintenance. Amplats indicated that it would fund, via a Johannesburg loan account to Bokoni, all once-off costs of placing the mine on 14 February 2019 care and maintenance as well as ongoing care-and-maintenance costs until 31 December 2019. Both the equity investments in Atlatsa and Bokoni had, in prior periods, been fully impaired.
48 Anglo American Platinum Limited Integrated Report 2018 SUMMARISED CONSOLIDATED PERFORMANCE REVIEW STATEMENT OF FINANCIAL POSITION as at 31 December 2018
2018 2017 Rm Rm
ASSETS Non-current assets 54,150 48,938 Property, plant and equipment 40,003 36,597 Capital work in progress 7,780 5,361 Investment in associates and joint ventures 407 2,464 Investments held by environmental trusts 1,183 970 OPERATIONS Other financial assets 4,109 3,507 Inventories 650 – •• Anglo Platinum Marketing Limited committed Other non-current assets 18 39 to invest USD100 million (equivalent to some Current assets 35,138 31,318 R1.3 billion) in two PGM market development Inventories 21,988 18,489 funds Trade and other receivables 1,607 2,097 •• Concluded acquisition of minority interests Other assets 1,347 1,075 in Mototolo Mine Other financial assets 276 73 •• Concluded the sale of Union Mine to Siyanda Taxation 379 469 Resources Cash and cash equivalents 9,541 9,115 •• Concluded the sell-down of equity in Royal Non-current assets held for sale – 558 Bafokeng Platinum Limited (RB Plat) Total assets 89,288 80,814 •• Concluded the disposal of 33% interest in EQUITY AND LIABILITIES BRPM JV to RB Plat. Share capital and reserves Share capital 27 27 OPERATIONS Share premium 22,746 22,673 Foreign currency translation reserve 2,644 1,764 •• Trade working capital at 31 December 2018 Remeasurements of equity investments 216 429 was R4.9 billion (equivalent to 15 days) irrevocably designated at FVTOCI compared to R6.2 billion at 31 December Retained earnings 21,478 16,634 2017 (26 days). The decrease is mainly due to Non-controlling interests 231 (526) lower trade receivables of R0.6 billion, an Shareholders’ equity 47,342 41,001 increase in trade creditors of R3.3 billion and Non-current liabilities 17,062 18,864 higher customer prepayment of R1.5 billion, Interest-bearing borrowings 9,362 6,038 partly offset by a build-up in work-in-progress Obligations due under finance leases 100 98 Environmental obligations 1,925 1,693 of R3.5 billion. Employee benefits 15 17 Other financial liabilities 762 239 ENVIRONMENTAL Deferred taxation 8,222 7,455 •• Current liabilities 24,884 20,374 PPE includes expenditure on the SO2 abatement plant for Polokwane smelter in Interest-bearing borrowings 129 1,713 Obligations due under finance leases 17 17 2018 of R0.4 billion, with a further R2.0 billion within one year to be spent over the next five years Trade and other payables 15,647 11,316 •• Total rehabilitation and decommissioning Other liabilities 8,423 6,691 provision of Amplats was R1.9 billion at the Other financial liabilities 639 616 end of 2018 (2017: R1.7 billion). Share-based payment provision 29 21 Liabilities associated with non-current – 575 assets held for sale Total equity and liabilities 89,288 80,814
Anglo American Platinum Limited Integrated Report 2018 49 PILLARS OF VALUE: FINANCIAL, COST
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2018
2018 2017 Rm Rm Gross sales revenue 74,582 65,688 Commissions paid – (18) Net sales revenue 74,582 65,670 Cost of sales (63,286) (56,578) Gross profit on metal sales 11,296 9,092 Other net income/(expenditure) 342 (6) FINANCIAL Loss on impairment and scrapping of property, (21) (1,699) plant and equipment •• Net sales revenue rose 14% to R74.6 billion Market development and promotional expenditure (796) (813) from R65.7 billion in 2017, due to a 13% Operating profit 10,821 6,574 higher US dollar basket price of USD2,219 Impairment of investment in associate – (235) per platinum ounce sold Bokoni Holdco •• Amplats’ EBITDA margin of 20%, supported Impairment of non-current financial assets (234) (777) by strong mine-to-market margins Impairment of investment in associate Bafokeng (1,133) (1,910) •• Headline earnings of R7.6 billion, up 95%. Rasimone Platinum Mine (BRPM) Profit on disposal of long-dated resources – 1,066 Loss on disposal of Union Mine and Masa Chrome (850) – COST Profit on disposal of associates 15 135 •• Cost of sales rose 12%. Following the sale Impairment of Richtrau 123 Proprietary Limited – (5) of Union operations in February 2018 to Gain on step acquisition of Mototolo business 336 – Siyanda, Amplats has higher purchase-of- Profit on disposal of Platinum Group Metals 249 – Investment Programme (PGMIP) concentrate costs and lower on-mine costs Interest expensed (738) (1,219) due to purchasing concentrate from Siyanda Interest received 265 222 •• Unit cost up 5% year on year before impact of Dividends received from Rand Mutual Assurance 42 – change in Mogalakwena Mine plan. Unit cost Fair value measurements of other financial assets 931 46 benefited from increased mined production, Losses from associates (net of taxation) (15) (362) offset by cost increases above inflation Losses from joint ventures (net of taxation) (25) – •• The change in mine plan at Mogalakwena Profit before taxation 9,659 3,540 (more waste mined and improved Taxation (2,666) (1,616) concentrator performance) resulted in lower Profit for the year 6,993 1,924 ore stockpile capitalisation compared to Total other comprehensive income/(loss), post-tax 650 (416) 2017, offset by increased capitalised waste Items that will be reclassified subsequently 880 (553) stripping at Mogalakwena, adding R461/Pt oz to profit or loss •• The all-in sustaining unit cost for 2018 was Deferred foreign exchange translation 880 (553) USD756 per Pt oz versus an achieved price gains/(losses) of USD871. Items that will not be reclassified (230) 137 subsequently to profit or loss Net (losses)/gains on equity investments at fair (261) 137 PEOPLE value through other comprehensive income (FVTOCI) •• Total labour makes up 33% of costs. Tax effects 31 – Total comprehensive income for the year 7,643 1,508 SOCIO-POLITICAL Profit attributed to: •• Social investment, community development Owners of the company 6,817 1,944 and empowerment spend of R0.6 billion in Non-controlling interests 176 (20) 2018. 6,993 1,924 Total comprehensive income attributed to: Owners of the company 7,467 1,528 Non-controlling interests 176 (20) 7,643 1,508 EARNINGS PER SHARE Earnings per ordinary share (cents) – Basic 2,599 741 – Diluted 2,589 739 Headline earnings 7,588 3,886
50 Anglo American Platinum Limited Integrated Report 2018 SUMMARISED CONSOLIDATED PERFORMANCE REVIEW STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2018
Re- measure- ments of Foreign equity currency investments translation irrevocably Non- Share Share reserve designated Retained controlling capital premium (FCTR) at FVTOCI earnings interests Total Rm Rm Rm Rm Rm Rm Rm
Balance at 31 December 2016 27 22,498 2,317 334 14,840 (234) 39,782 Total comprehensive (loss)/income for the year (553) 137 1,944 (20) 1,508 Deferred taxation charged directly to equity (42) 2 (40) Cash distributions to minorities (272) (272) Shares acquired in terms of the BSP – treated as treasury shares (–)* (155) (155) Shares vested in terms of the BSP – * 330 (330) – Equity-settled share-based compensation 189 – 189 Shares purchased for employees (11) (11) Balance at 31 December 2017 27 22,673 1,764 429 16,634 (526) 41,001 Total comprehensive income/(loss) for the year 880 (261) 6,817 176 7,612 Deferred taxation charged directly to equity 31 6 37 Transfer of reserve upon disposal of investments 17 (17) – Dividends paid** (1,922) (1,922) Disposal of business 779 779 Retirement benefit 5 5 Cash distributions to minorities (198) (198) Shares acquired in terms of the BSP – treated as treasury shares (–)* (141) (141) Shares vested in terms of the BSP – * 214 (214) – Equity-settled share-based compensation 180 180 Shares forfeited to cover tax expense on vesting (11) (11) Balance at 31 December 2018 27 22,746 2,644 216 21,478 231 47,342 * Less than R500,000. Per share (R) Rm ** Dividends paid Interim 2018 3.74 1,000 Final 2017 3.49 922 1,922
FINANCIAL CAPITAL
•• Total shares in issue were 269,681,886 (2017: 269,681,886) and treasury shares held were 978,316 (2017: 1,162,514). All treasury shares are held as conditional awards under the Amplats bonus share plan.
Anglo American Platinum Limited Integrated Report 2018 51 PILLARS OF VALUE: FINANCIAL, COST
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2018
2018 2017 Rm Rm Cash flows from operating activities Cash receipts from customers 75,184 65,993 Cash paid to suppliers and employees (57,224) (50,126) Cash generated from operations 17,960 15,867 Interest paid (net of interest capitalised) (609) (1,004) Taxation paid (1,771) (1,742) Net cash from operating activities 15,580 13,121 Cash flows used in investing activities Purchase of property, plant and equipment (includes interest (6,964) (4,969) capitalised) Proceeds from sale of plant and equipment 24 17 Purchases of financial assets investments (39) (68) Net proceeds on disposal of Union Mine and Masa Chrome 414 – Purchase of concentrate pipeline (974) (1,529) Receipt of deferred consideration 101 – Proceeds on disposal of long-dated resources – 1,066 Net proceeds on disposal of RB Plat shares 510 – Acquisition of Mototolo JV (1,278) – Proceeds on disposal of investment in BRPM 555 144 Shareholder funding capitalised to investment in associates (869) (1,156) Acquisition of equity investment in Hydrogenious (48) (13) Proceeds from disposal of Hydrogenious 353 – Acquisition of convertible notes in United Hydrogen (15) (4) Proceeds from disposal of PGMIP investments 310 – Investment in joint ventures (AP Ventures) (382) – Redemption of preference shares in Baphalane Siyanda – 86 Chrome Company Advances made to Plateau Resources Proprietary Limited (133) (708) FINANCIAL Interest received 260 143 •• Growth in environmental trusts 6 8 Net cash of R2.9 billion at year end. Other advances (45) (135) Excluding customer prepayment of Net cash used in investing activities (8,214) (7,118) R6.1 billion, net debt is R3.2 billion Cash flows used in financing activities •• Free cash flow from operations of Purchase of treasury shares for the bonus share plan (BSP) (141) (155) R5.6 billion, up 60% Repayment of interest-bearing borrowings (4,889) (1,659) •• Liquidity headroom of R23.4 billion Repayment of finance lease obligation (18) (17) •• Dividends paid of R1.9 billion in 2018 Cash distributions to non-controlling interests (198) (272) Dividends paid (1,922) – and a final dividend declared of Net cash used in financing activities (7,168) (2,103) R7.51 per share, or R2.0 billion. Net increase in cash and cash equivalents 198 3,900 Cash and cash equivalents at beginning of year 9,357 5,457 Foreign exchange differences on Unki cash and (14) – cash equivalents Cash and cash equivalents at end of year 9,541 9,357 Movement in net cash Net debt at beginning of year (1,833) (7,319) Net cash from operating activities 15,580 13,121 Net cash used in investing activities (8,214) (7,118) Net cash used in financing activities other than debt repayment (2,628) (517) Foreign exchange differences on Unki cash and cash (14) – equivalents Net cash/(debt) at end of year 2,891 (1,833) Made up as follows: Cash and cash equivalents 9,541 9,115 Less: Restricted cash (366) – Cash and cash equivalents classified as held for sale – 242 Non-current interest-bearing borrowings (6,038) (9,362) Obligations due under finance leases within one year (17) (17) Current interest-bearing borrowings (129) (1,713) Obligations due under finance leases (100) (98) 2,891 (1,833)
52 Anglo American Platinum Limited Integrated Report 2018 TAX CONTRIBUTION THROUGH THE PERFORMANCE REVIEW LIFECYCLE OF A MINE
A key component of creating value to our host countries and stakeholders is the paying of taxes.
Mining is a long-life, high-risk business with very significant initial Tax matters are regularly presented to our board and audit and risk capital investment required long before any return on investment committee, which take a particular interest in the extent to which is realised (see illustration on page 54). We therefore support the our approach to tax meets our commitments to stakeholders, design of fiscal regimes that consider the relative long-term including host governments and local communities and our policy contribution from the mining industry and which are not focused of good tax governance. narrowly on short-term outcomes. In addition, our tax affairs are regularly scrutinised by our external The amount of tax generated from our activities and paid to auditors and by tax authorities as part of the normal course of local governments, and our general approach to tax and tax disclosure, compliance and reporting procedures. are of considerable interest to many of our stakeholders. Overall, we believe our tax governance framework is consistent with Being able to demonstrate our commitment to sustainable tax the tax authorities’ objective of improving tax compliance and to principles, such as revenue transparency and responsible tax encourage businesses to adopt best-practice tax risk management practices, is critical for building trust and in supporting our social processes. We will continue to monitor and adopt future licence to operate. It is equally important to show our contribution developments to ensure we are a leading organisation in this area. in more challenging economic times, as well as when commodity Approach to tax management prices are more buoyant. Our approach to tax is set out in our tax strategy which we use as a APPROACH TO RISK MANAGEMENT AND means of explaining our way of working to external stakeholders, GOVERNANCE ARRANGEMENTS employees and our in-house team of tax professionals. We take a responsible approach to tax, supporting the principles This strategy includes a number of key points: of transparency and active and constructive engagement with our •• We act responsibly in relation to tax planning matters and do stakeholders to deliver long-term sustainable value. Our tax not take an aggressive approach strategy is aligned with our code of conduct, long-term business •• We only undertake transactions that we are prepared to fully strategy, and our purpose of re-imagining mining to improve disclose and are based on strong underlying commercial people’s lives. motivation, and which are not (or appear to be) artificial or We see a benefit through this broader engagement in our approach contrived to tax, both for our business and for our stakeholders. At the same •• We conduct intragroup transactions on an arm’s-length basis time, increased transparency can empower communities by helping and comply with obligations under transfer pricing rules in the them to understand how much income is generated from the jurisdictions where we operate and global principles mining activity in their regions. •• Our guiding principle is to allocate value by reference to where it is created and managed Tax governance •• We do not use ‘tax haven’ jurisdictions to manage taxes. In the Anglo American group, we have a global team of tax professionals charged with managing its affairs in line with its tax Approach to dealing with tax authorities strategy. This team is committed to acting in accordance with our We act responsibly on all tax compliance matters, respecting the code of conduct and our tax strategy; internal tax policies ensure laws of each country in which we operate. that the strategy is embedded in the way we do business. Our tax We seek to maintain a long-term, open, constructive relationship professionals also strive to maintain a long-term, open and with tax authorities and governments on tax matters. constructive relationship with tax authorities, governments and other relevant stakeholders. We proactively engage with those tax authorities and governments directly and indirectly (ie through relevant representative bodies) We actively engage with a variety of stakeholders on a wide range of to shape future tax policy and legislation in ways that share our issues relating to tax, including industry bodies which helps to bring experience and promote and protect Amplats’ interests, principles commercial understanding and experience into debates about tax and strategy. policy and governance.
Anglo American Platinum Limited Integrated Report 2018 53 PILLARS OF VALUE: FINANCIAL, COST
OUR ECONOMIC CONTRIBUTION IN SOUTH AFRICA
Amplats is proud of the role it has played in the country’s TOTAL TAX AND ECONOMIC CONTRIBUTION economy and continues to explore new ways to support development and deliver sustainable value. R41,862m
CAPITAL TOTAL INVESTMENT PROCUREMENT R6,636.9m R21,060.6m Capital investment is defined as Refers to addressable expenditure cash expenditure on property, plant only and includes all supply chain and equipment, including related related spend from third-party derivatives, proceeds from disposal suppliers. It includes opex and of property, plant and equipment capex-related transactions and and direct funding for capital inter-business unit procurement. expenditure from non-controlling interests. Includes capitalised operating cash outflows. LOCAL PROCUREMENT R3,606.8m Procurement of goods or services from within the same immediate area as the operation, as defined by each operation. A localised supplier is a supplier that WAGES AND RELATED meets the business unit PAYMENTS criteria for localised procurement, allowing goods or services to be R9,189.8m procured from within the same immediate area as the Payroll costs in respect of operation. This is defined employees, excluding contractors using the same parameters and certain associates and joint and definitions as set out in ventures’ employees, and including SEAT Tool 2A – Profiling the a proportionate share of employees Local Area. within joint operations.
TOTAL TAXES BORNE AND COLLECTED R4,376.5m R1,605.2m CORPORATE INCOME TAX Calculated based on profits and includes withholding taxes. R721.9m ROYALTIES AND MINING TAXES TOTAL SOCIAL Revenue, production and INVESTMENT profit-based royalties. R53.9m OTHER PAYMENTS BORNE R599.1m Other payments directly Refers to all social incurred by Anglo American investment spend that Platinum. is not related to impact management, either from R1,995.5m allocated budgets or TAXES COLLECTED established foundations. Taxes paid by Anglo This includes community American Platinum on trust and dividends paid out behalf of other parties as a to communities. result of the company’s economic activity.
54 Anglo American Platinum Limited Integrated Report 2018 OUR ECONOMIC CONTRIBUTION IN PERFORMANCE REVIEW ZIMBABWE
Unki platinum mine is located in the southern half of TOTAL TAX AND ECONOMIC CONTRIBUTION Zimbabwe’s Great Dyke geological formation– widely recognised as the second largest resource of PGMs in the R2,554.3m world. We continue to work together with the Zimbabwean government on compliance with the Indigenisation and TOTAL Economic Empowerment Act. PROCUREMENT R1,344.9m CAPITAL Refers to addressable expenditure INVESTMENT only and includes all supply chain related spend from third-party suppliers. It includes opex and capex-related transactions and R518.1m inter-business unit procurement. Capital investment is defined as cash expenditure on property, plant and equipment, including related derivatives, proceeds from disposal LOCAL of property, plant and equipment PROCUREMENT and direct funding for capital expenditure from non-controlling interests. Includes capitalised R932.7m operating cash outflows. Procurement of goods or services from within the same immediate area as the operation, as defined by each operation. A localised supplier is a supplier that WAGES AND RELATED meets the business unit PAYMENTS criteria for localised procurement, allowing goods or services to be R422.4m procured from within the same immediate area as the Payroll costs in respect of operation. This is defined employees, excluding contractors using the same parameters and certain associates and joint and definitions as set out in ventures’ employees, and including SEAT Tool 2A – Profiling the a proportionate share of employees Local Area. within joint operations.
TOTAL TAXES BORNE AND COLLECTED R258.9m R0.54m CORPORATE INCOME TAX Calculated based on profits and includes withholding taxes. Rnil ROYALTIES AND MINING TAXES CORPORATE SOCIAL Revenue, production and INVESTMENT profit-based royalties. R113.8m OTHER PAYMENTS BORNE R9.95m Other payments directly Refers to all social incurred by Anglo American investment spend that Platinum. is not related to impact management, either from R144.6m allocated budgets or TAXES COLLECTED established foundations. Taxes paid by Unki on behalf of other parties as a result of the company’s economic activity.
Anglo American Platinum Limited Integrated Report 2018 55 PILLAR OF VALUE: PRODUCTION
OPERATIONS OVERVIEW
WHOLLY OWNED MINES We own and manage four mining complexes – Mogalakwena, Amandelbult, Unki and Mototolo. These stretch across the Bushveld complex in South Africa while Unki is located on Zimbabwe’s Great Dyke. Except for the open-pit Mogalakwena Mine, all mines are underground conventional and mechanised operations. We purchased the remaining 39% interest in the Mototolo joint venture from Glencore, effective 1 November 2018. We also have a number of projects, largely on the Eastern Limb of the Bushveld complex. The Twickenham project was placed on care and maintenance in July 2016 and is currently being used to test new mining technology.
Intellectual capital At Mogalakwena, we recorded a 35% operational improvement after implementing our new operating model – working smarter to deliver benchmark performance.
56 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
Strategy Our wholly owned mines, in conjunction with executive and senior leadership, focused on embedding the company strategy and continue to strive for operational excellence. We have identified areas for operational improvement and we aim to enhance and deliver in project execution, mining engineering, improving the cost base and safety performance.
The next phase of the strategy focuses on driving further value from the operations in three key areas:
RESTRUCTURING AND EXTRACTING THE FULL INVESTING IN OUR CORE REPOSITIONING OUR ASSETS POTENTIAL FROM OUR ASSETS TO DELIVER INTO A VALUE-OPTIMISED OPERATIONS THROUGH OUR INDUSTRY-LEADING CASH PORTFOLIO PEOPLE FLOWS AND RETURNS •• Rationalise the portfolio in line with •• Achieving world benchmark •• Focus on low-capex, fast-payback our strategy. Mototolo was acquired performance, and then redefining projects, including chrome plant on 1 November 2018, and enables industry-best performance through expansions, debottlenecking and significant synergies with the innovation, technology an replacement projects adjacent Der Brochen resource; digitalisation life-of-mine goes from around five years to 30 years
KEY FEATURES
Solid operational performance Two fatalities at across the 24% Fatality free: Mogalakwena (over six years) and Amandelbult own mines improvement Unki (seven years) in total recordable case frequency portfolio rate (TRCFR)
9% increase 11% increase Mototolo increase in total PGM production in attributable economic free cash flow acquisition completed 1 November 2018
Anglo American Platinum Limited Integrated Report 2018 57 PILLAR OF VALUE: PRODUCTION
OPERATIONS OVERVIEW CONTINUED
MANAGED MINES – MOGALAKWENA Mogalakwena Mine is 30km north-west of the town of Mokopane in Limpopo province, and operates under a mining right covering 137km2. Current infrastructure comprises five open pits (Sandsloot, Zwartfontein, Mogalakwena South, Central and North). The mining method is truck-and-shovel, and current operating pit depths vary from 45m to 245m. Ore is milled at the on-mine North and South concentrators as well as Messina Mine Baobab concentrator.
Mogalakwena strategy
OPERATIONAL EXCELLENCE EXCEEDING BENCHMARK INVESTING IN GROWTH •• Improving operational efficiencies PERFORMANCE AND •• Robust palladium demand + and productivity. Engineering INNOVATION processing capacity = growth performance for trucks, shovels and •• Mining performance: improving opportunity drills improved by minimising drilling and blast performance; pit •• Palladium supply deficits expected downtime and optimising equipment equipment scheduling and •• Exiting Rustenburg concentrate effective time as well as uptime production practices creates downstream capacity •• 35% improvement post •• Concentrator performance: •• Third concentrator investment – operating model at concentrators increasing runtime of North study being advanced. •• North concentrator: plant capacity concentrator by 5%. Maintaining increased 20% and grade recovery North concentrator recoveries performance shifted by optimising (but targeting increased PGM and process flow and flotation kinetics base metal recovery) while reducing •• South concentrator: improved mass pull reliability and efficiency of •• Innovation and technology: concentrate pumps and better bulk-sorting approach that rejects stability and control of flotation cells. coarse liberated gangue using sensor technology and screens. Primary benefit is a 10% increase in feed grade.
KEY FEATURES
Record PGM and platinum TRCFR improved by Increased EBITDA by 8.7 million production, both up Fatality-free shifts (six and half years) 7% 29% 7%
58 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
MANAGED – 100% OWNED 2018 2017 Mogalakwena produced another record year of production of Safety 1,170,000 PGM ounces, up 7%. Production increased through Fatalities Number – – mining a targeted higher-grade area in the North pit in the first TRCFR Rate/ 0.95 1.33 half of the year, and due to optimisation of the primary mill at million hrs North concentrator plant leading to improved throughput and Total PGM production 000 oz 1,170.0 1,098.5 metal recovery. Net sales revenue R million 18,106 16,118 EBITDA R million 8,249 7,700 Due to an optimised mine plan, which was implemented at the EBITDA margin % 45.6 47.8 beginning of 2018, the pit walls of the central pit were steepened. ROCE % 30.8 31.8 This, together with improved truck and shovel performance, Economic free cash flow R million 4,039 3,977 enabled an opportunity to move more waste tonnes in the period. Net cash flow R million 3,916 3,756 By mining additional waste tonnes this period, more ore tonnes Cash on-mine cost/tonne R/tonne 456 351 were exposed, allowing for more consistent mining of ore tonnes milled over the short to medium term, reducing the need to drawdown on Cash operating cost/ R/PGM oz 7,838 6,628 PGM oz produced ore stockpiles from 2021. In addition, improvements in Cash operating cost/ R/Pt oz 18,522 15,696 concentrator performance allowed more ore to be processed and, Pt oz produced as a result, less ore was stockpiled AISC produced USD/Pt oz 222 347 The consequent impact on Mogalakwena’s unit cost was an 18% AISC sold USD/Pt oz 286 340 increase to R18,522 per platinum ounce. Excluding the impact of MINERAL RESOURCES INCLUSIVE OF ORE RESERVES the lower ore capitalisation and increased waste stripping, unit cost Platreef 3,683.5 Mt 293.3 (4E) Moz increases 9%, benefiting from higher production but offset by above-inflationary cost increases eg diesel and labour. Cash SAFETY operating costs per PGM ounce (metal in concentrate) was Mogalakwena has been fatality free for over six years and TRCFR R7,838 against R6,628 per ounce in 2017. improved 29% to 0.95 in 2018. This reflects implementation of the revised safety, health and environment strategy, and focus on Mogalakwena delivered R4.0 billion of economic free cash flow reporting and learning from high-potential incidents. (defined as operating free cash flow from consolidated activities less/add economic interest in the asset). The mine had an EBITDA Mining and concentrating (tonnes milled m) +1% margin of 46% and ROCE of 31%.
15 13.6 13.8 12.6 All-in sustaining costs (AISC) (includes operating costs as defined 11.7 11.7 12 above, all sustaining capital expenditure, capitalised waste stripping 9 and allocated marketing and market development costs net of by product revenue) per platinum ounce sold was USD286 per ounce, 6 down from USD340 in the previous year mainly due to the benefit 3 of increased by-product revenue. AISC, if all produced metal was 0 sold would have been USD222 per platinum ounce sold. Tonnes milled2014 (m) 2015 2016 2017 2018 262 CAPITAL EXPENDITURE Concentrating (PGM ounces 000) +6% Total capital expenditure (excluding capitalised waste stripping and 1,200 1,099 1,170 after allocating off-mine smelting and refining capital) rose 16% to 980 126 134 1,000 868 936 R1.9 billion in 2018. Stay-in-business capital expenditure was 113 116 800 102 541 R1.8 billion (R1.4 billion in 2017) and project capital expenditure 452 509 600 396 430 decreased to R0.1 billion (R0.2 billion in 2017). 400 464 495 Capitalised waste stripping rose from R0.8 billion in 2017 to 200 370 393 412 R1.5 billion in 2018. This is expected to be around R2.0 billion 0 2014 2015 2016 2017 2018 to R2.2 billion in 2019. ■ Platinum ■ Palladium ■ Other PGMs OUTLOOK Value enhancing (AISC USD/Pt oz) In 2019, Mogalakwena is expected to produce 800 1,217,600 PGM ounces, including around 511,300 platinum 700 607 600 ounces. 498 (16%) 500 400 340 269 286 300 200 100 0 2014 2015 2016 2017 2018 262 Anglo American Platinum Limited Integrated Report 2018 59 PILLAR OF VALUE: PRODUCTION
OPERATIONS OVERVIEW CONTINUED
MANAGED MINES – AMANDELBULT The Amandelbult Mine complex is in Limpopo, between the towns of Northam and Thabazimbi, on the north-western Limb of the Bushveld complex. The mine operates under a mining right covering 141km2. The complex has two mines (Tumela and Dishaba) and three concentrators with a chrome plant. Current working mine infrastructure has five vertical and seven decline shaft systems to transport rock, men and material, with mining on the Merensky and UG2 reef horizons. The layout is conventional scattered breast mining with strike pillars and open pits. The operating depth for current workings runs from surface to 1.3km below surface. Short-life, high-value open-pit mining supplements underground production as this transitions from Tumela Upper to Dishaba Lower UG2.
Amandelbult strategy
MODERNISATION LOW CAPITAL DEBOTTLENECK EXTRACTING THE VALUE OF •• Dishaba UG2 ramp-up – developing OF CONCENTRATOR ALL METALS MINED – ‘mine within a mine’ (mining UG2 •• Unlock potential at 15E mechanised CHROME from existing Merensky extension •• Chrome plant optimised for infrastructure) •• Deepening 50E shaft. extraction from ore milled in •• Productivity and efficiency Merensky concentrator improvement from cycle mining •• Yield efficiency improvement •• Embedding operating model •• Fine chrome recovery increasing •• Modernisation roll-out. chrome to 2Mt by 2023.
KEY FEATURES
Improved TRCFR and LTIFR of Production from the chrome plant 2 recordable fatalities 1% increase in PGM ounces, including 442,700 platinum ounces 3.77 and 2.92 rose 27%, yielding respectively, the lowest since 831,900 tonnes of chrome inception concentrate Good cash flow from new chrome plant.
MANAGED – 100% OWNED 2018 2017 MINERAL RESOURCES INCLUSIVE OF ORE RESERVES Safety Merensky 161.1 Mt 35.7 (4E) Moz Fatalities Number 2 3 TRCFR Rate/ 3.77 4.65 UG2 379.2 Mt 66.6 (4E) Moz million hrs Total PGM production 000 oz 868.8 858.0 SAFETY Net sales revenue R million 13,192 11,423 Tragically, there were two work-related fatalities in 2018, both at EBITDA R million 2,031 1,173 Dishaba (detailed on page 25 of supplementary report). EBITDA margin % 15.4 10.3 Management has committed to maintaining safe operations and ROCE % 16.6 5.7 this focus is producing results. TRCFR is the lowest on record, down Economic free cash flow R million 603 91 19% to 3.77 (2017: 4.65) after implementing the revised safety, Net cash flow R million 254 73 health and environment strategy and the emphasis on reporting Cash on-mine cost/tonne R/tonne 1,300 1,197 and learning from high-potential incidents. milled Despite the fatalities, Amandelbult reached several safety Cash operating cost/ R/PGM oz 11,592 10,846 milestones during the year: PGM oz produced •• Tumela Mine – 3 million fatality-free shifts; 2.7 million fall-of- Cash operating cost/ R/Pt oz 22,752 21,246 ground fatality-free shifts and 660 fatality-free days to date Pt oz produced •• Dishaba Mine – 5.8 million fall-of-ground fatality-free shifts AISC produced USD/Pt oz 840 1,026 and 1,497 fall-of-ground fatality-free days (before fatality in AISC sold USD/Pt oz 794 955 October 2018, five years after the last fall-of-ground fatality in 2014) •• Amandelbult central services – 3 million fatality-free shifts to date
60 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
•• Amandelbult concentrator: 6.1 million fatal-free shifts Amandelbult is moving towards being primarily a UG2 mine. •• Amandelbult chrome plant: 931 LTI-free days (no LTIs since Chrome-recovery capacity is being extended to the Merensky commencement); 650 all injury-free days since start-up. concentrator by constructing two additional modules at a cost of R450 million, which will be commissioned in July 2019 and add Chrome (tonnes produced) 27% 360,000 tonnes of chrome production per annum.
1,000 Amandelbult delivered economic free cash flow of R0.6 billion and 832 the mine had an EBITDA margin of 15% and ROCE of 17%. 800 654 AISC per platinum ounce sold was USD794 per ounce, down from 600 USD955 in the previous year due to improvements in the rand 400 basket price, including a greater contribution from chrome. AISC, 235 200 if all produced metal was sold, would be USD840 per platinum ounce sold. 0 Tonnes milled2014 (m) 2015 2016 2017 2018 CAPITAL EXPENDITURE 262 Mining and concentrating (PGM ounces 000) +1% Total capital expenditure (after allocating off-mine smelting and refining capital) rose to R1.2 billion in 2018 (R581 million in 2017) 1,200 885 838 858 869 due to modernisation, mechanising the mine and chrome 1,000 219 210 218 221 expansion. Stay-in-business capital expenditure was R750 million 800 and project capital was R450 million (2017: R563 million and 207 202 205 600 416 199 R18 million respectively) to construct additional modules for the 400 102 459 438 100 429 443 chrome plant. 200 214 0 OUTLOOK 2014 2015 2016 2017 2018 ■ Platinum ■ Palladium ■ Other PGMs Total production from Amandelbult in 2019 is expected to rise to around 958,800 PGM ounces, with some 490,200 platinum Value enhancing (AISC USD/Pt oz) ounces. Further low-capital options to improve profitability are 1,500 1,442 being studied. Two projects under consideration (deepening 50E (17%) shaft and unlocking potential at 15E mechanised extension) will 1,000 972 955 enable Amandelbult to sustain production output at around 864 900 794 600,000 platinum ounces for some 10 years. These require low investment with quick build-up, delivering around 90,000 platinum 600 ounces at steady state. Fine chrome recoveries are planned from 300 2022, depending on technology and innovation, which will increase chrome production to 2 million tonnes by 2023. 0 2014 2015 2016 2017 2018 262 Total PGM production at Amandelbult increased by 1% to 868,800 ounces, due to increased underground production delivered to the concentrator, primarily from Dishaba. Dishaba Mine development led to a 7% increase in immediately available ore reserves compared with the prior year, highlighting the progress made in developing Dishaba Lower at a low capital cost of R0.5 billion. This was against previous thinking that a new shaft at much higher capital investment was the only replacement option. As part of the overall improvement plan, Dishaba No 2. Vertical shaft has been successfully upgraded from 160ktpm to 230ktpm hoisting capacity by the end of 2018. However, production was significantly impacted in the final quarter, with lower underground production delivered to the concentrator primarily due to the section 54 stoppage following the fatal incident on 18 October 2018 and subsequent extensive retraining of employees, some impact from Eskom load shedding, and persistent high absenteeism in the final quarter. Chrome production at Amandelbult increased 27% to 831,900 tonnes (on a 100% basis) from 654,400 tonnes in 2017. A chrome interstage project was implemented in Q3 2018 at a capital cost of R10 million which increased the yield from 13.5% to 16.6%.
Anglo American Platinum Limited Integrated Report 2018 61 PILLAR OF VALUE: PRODUCTION
OPERATIONS OVERVIEW CONTINUED
MANAGED MINES – UNKI PLATINUM MINE – ZIMBABWE Unki Mine Private Limited’s operations are on the Great Dyke in Zimbabwe, 60km south-east of the town of Gweru. The mine is a mechanised, trackless, bord-and-pillar underground operation. A twin-decline shaft system provides access to underground workings for men and material, as well as ore conveyance. Both shafts are now 2,267m from the portal on surface. Twenty-one mining sections have been established so far, 16 of which are fully equipped and have strikes belts for transferring ore directly to the main incline shaft conveyor. Run-of-mine ore is processed at the 120,000tpm concentrator plant on site. Since commissioning the concentrator plant at the beginning of 2011, ongoing debottlenecking has enabled it to treat up to 170,000tpm.
Unki strategy
MODERNISATION LOW CAPITAL DEBOTTLENECK EXTRACTING THE VALUE OF •• Concentrator plant capacity OF CONCENTRATOR ALL METALS MINED – increased to 170,000tpm – mining •• Capital investment to increase CHROME production to be delivered through concentrator capacity to •• Ore Reserves 5.6 4E Moz improved efficiency of existing 210,000tpm being studied. (24-year life) equipment and labour •• Mineral Resource inclusive of •• Improving concentrator recoveries Ore Reserves 30.2 4E Moz. while reducing mass pull, reducing volume to be smelted.
KEY FEATURES
Fatality-free for TRCFR of Unki smelter commissioning began 16% in Q3 2018 with a 7 years increase in PGM ounces, including 1.45 is the lowest since 85,900 platinum ounces inception 16-month ramp-up
MANAGED – 100% OWNED 2018 2017 MINERAL RESOURCES INCLUSIVE OF ORE RESERVES Safety MSZ 224.9 Mt 30.2 (4E) Moz Fatalities Number – – TRCFR Rate/ 1.45 2.76 million hrs SAFETY Total PGM production 000 oz 192.8 165.9 Unki has been fatality-free for seven years and TRCFR improved Net sales revenue R million 2,884 2,489 47% to 1.45 after launching the stop-and-fix campaign. LTIFR also EBITDA R million 835 823 improved to 1.04 (2017: 1.51). EBITDA margin % 28.9 33.1 Mining and concentrating (tonnes milled average 000tpm) ROCE % 9.3 9.5 Economic free cash flow R million 525 614 200 +10% 160.4 Net cash flow R million 155 296 146.0 150 138.0 143.3 Cash on-mine cost/tonne R/tonne 863 811 133.1 milled 100 Cash operating cost/ R/PGM oz 10,784 10,519 150 PGM oz produced 50 Cash operating cost/Pt oz R/Pt oz 24,180 23,387 produced 0 AISC produced USD/Pt oz 449 694 2014 2015 2016 2017 2018 AISC sold USD/Pt oz 616 612
62 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
Mining and concentrating (PGM ounces 000) +16% CAPITAL EXPENDITURE
1,200 193 Total capital expenditure (after allowing for off-mine smelting and 162 166 31 1,000 142 27 refining capital) rose to R598 million from R498 million in 2017. 131 26 76 800 24 21 61 64 Stay-in-business capital expenditure was R228 million, while 600 48 52 project capital expenditure was R370 million (2017: R181 million 400 75 75 86 66 and R318 million respectively). 200 62 0 The Unki smelter was completed in 2018, on schedule and on 2014 2015 2016 2017 2018 budget (capital investment of R672 million), and commissioned ■ Platinum ■ Palladium ■ Other PGMs in Q3 2018. Value enhancing (EBITDA Rm) +1% OUTLOOK 1,000 823 835 Total PGM production from Unki in 2019 is expected to be around 800 184,800 PGM ounces, including some 83,200 platinum ounces.
600 486 Unki is debottlecking the mine and concentrator, and increasing 400 328 concentrator plant capacity to 170,000tpm. 264 200
0 2014 2015 2016 2017 2018
Unki Mine in Zimbabwe produced a record 192,800 PGM ounces, an increase of 16%. Production increased due to an increase in tonnes milled, up 10% due to improved underground productivity, while the 4E built-up head grade increased to 3.51g/t (2017: 3.47g/t) due to improved mining reef cut and reducing waste tonnes mined. Unki delivered R0.5 billion of economic free cash flow and an EBITDA margin of 29% and ROCE of 9%. If adjusted for the sale of treasury bills and real time gross settlement (RTGS) forex loss, the EBITDA margin would be 27% and ROCE would be 8%. AISC (excluding the receipts of treasury bills) per platinum ounce sold was USD616 per ounce, marginally up from USD612, due to the benefit from increased by-product revenue offset by the RTGS forex loss. The equivalent AISC would be USD449 if all material produced had been sold. Excluding the impact of the RTGS forex loss the AISC was USD472 per ounce and USD311 per ounce if all material produced had been sold.
Anglo American Platinum Limited Integrated Report 2018 63 PILLAR OF VALUE: PRODUCTION
OPERATIONS OVERVIEW CONTINUED
MANAGED MINES – MOTOTOLO
INTELLECTUAL CAPITAL KEY FEATURES At Mototolo/Der Brochen, we are building a new PGM hub on the Eastern Limb – working for the future by ensuring replacement and • Acquired Glencore’s 40.2% and Kagisos 9.8% interests in the growth optionality. Mototolo JV • Mototolo concentrator achieved 1,000 injury-free days on MINE OVERVIEW 9 October 2018 Mototolo is a 50:50 JV between Glencore Kagiso Platinum Venture • Mototolo reached 4 million fatality-free shifts and Borwa shaft and Rustenburg Platinum Mines. Glencore manages the mine, achieved 543 injury-free days at end December 2018 while Amplats manages the concentrator. Situated in Limpopo, • Mototolo Borwa shaft was awarded the best-improved Mototolo is 30km west of the town of Burgersfort. It forms part of platinum shaft at MineSAFE 2018 the Eastern Limb of the Bushveld complex and operates under a • Mototolo’s TRCFR improved 48% to 1.95 mining right covering 9km2. Current mine infrastructure consists of • Record milled tonnes and PGM production. two decline shafts, Lebowa and Borwa, and a concentrator. Mototolo is fully mechanised and extracts the UG2 horizon some 2017 450m below surface using bord-and-pillar mining. (100% owned operation from 2018 1 November 2018) In July 2018, Amplats announced that its wholly owned subsidiary, Rustenburg Platinum Mines Limited (RPM) had signed an Safety agreement with Glencore Operations South Africa Proprietary Fatalities Number – – Limited to purchase the latter’s participation interest in the Mototolo TRCFR Rate/ 1.95 3.72 million hrs JV. The effective date of transfer of Mototolo Mine operations to RPM was 1 November 2018. Total PGM production 000 oz 288 185 Net sales revenue R million 3,323 2,403 EBITDA R million 819 330 Unki strategy EBITDA margin % 24.7 13.7 ROCE % 34.4 37.0 INTEGRATE AND EMBED Economic free cash flow R million 113 90 Net cash flow R million 113 90 •• Amplats to acquire Glencore/KTH’s 50% interest in Cash on-mine cost/tonne R/tonne 463 393 Mototolo JV milled •• Integration as wholly owned business under way. Cash operating cost/ R/PGM oz 9,767 10,127 PGM oz produced Cash operating cost/ R/Pt oz 21,934 OPERATIONAL EXCELLENCE 21,217 Pt oz produced •• Accessing Der Brochen triangle and Two Rivers Platinum All statistics inclusive of mine and purchase of concentrate. ground through existing shaft infrastructure •• Expedited debottlenecking of concentrator to 240ktpm MINERAL RESOURCES INCLUSIVE OF ORE RESERVES •• Chrome interstage (increasing yield from 6% to 12%). UG2 21.2 Mt 2.9 (4E) Moz JV PARTNER INVESTING IN DER BROCHEN Glencore Kagiso Platinum Venture 50% •• PGM hub on the Eastern Limb (30+ years life of mine) The concentrator was stopped from mid August to early December with replacement and growth optionally 2017 to construct the buttress wall at the Helena tailings storage •• 240ktpm replacement project facility. •• Capex USD262 million, IRR 44%, NPV USD258 million •• Option to expand to 320ktpm.
64 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
Mining and concentrating (PGM ounces 000) +56% TWICKENHAM PROJECT 300 288 (MANAGED – 100% OWNED) 262 249 252 250 73 66 64 64 200 185 The Twickenham project potentially offers 83 150 74 70 71 47 long-term prospects for shallow 100 53 122 115 117 132 mechanised mining on both the UG2 reef 50 85 0 and Merensky reef horizons. In the 2014 2015 2016 2017 2018 ■ Platinum ■ Palladium ■ Other PGMs current commodity price environment, we have delayed all expansionary project Concentrating (tonnes milled million) +42% decisions to after 2019. Twickenham was 3.0 2.6 2.6 2.6 2.7 placed on care and maintenance in 2016, 2.5 and some of the mining footprint is being 1.9 2.0 used to research new mining technology, 1.5 1.0 including small-scale mining activity. 0.5 0.0 2014 2015 2016 2017 2018
Value enhancing (AISC (USD/Pt oz) -9%
951 1,000 902 823 800 759 681 600
400
200
0 2014 2015 2016 2017 2018 SAFETY Mototolo has been fatality-free since 2011 and achieved a TRCFR of 1.95 in 2018, a 48% improvement from 2017. The Mototolo concentrator achieved 1,000 injury-free days on 9 October 2018, while the mine recorded 4 million fatality-free shifts and Borwa shaft reached 543 injury-free days at end December 2018. OPERATIONAL REVIEW Mototolo had an improved performance in 2018 increasing production by 56% to 287,700 PGM ounces (2017: 184,800 ounces). The mine returned to normal production levels in 2018, prior to the impact of the four-month concentrator shutdown in 2017 for remedial work to restore the Helena tailings storage facility. Additional production of 20,800 PGM ounces was toll treated at Bokoni Mine (2017: 11,900 PGM ounces) from ore stockpiled during the concentrator plant shutdown. Mototolo delivered economic free cash flow of R0.1 billion, due to the loss of cash flow for four months following the concentrator disruptions at the end of 2017. This will normalise in 2019. The mine had an EBITDA margin of 25% and ROCE of 34% based on the mine as a wholly owned mine. CAPITAL EXPENDITURE Our attributable share of capital expenditure at R407 million was higher than 2017, mainly due to construction of the new Mareesburg tailings dam.
Anglo American Platinum Limited Integrated Report 2018 65 PILLAR OF VALUE: PRODUCTION
OPERATIONS OVERVIEW CONTINUED
JOINT VENTURES AND ASSOCIATES This portfolio includes the Bafokeng Rasimone (BRPM), Kroondal and Marikana mines in the Western Limb of the Bushveld complex, and the Bokoni and Modikwa mines in the Eastern Limb.
66 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
The joint ventures (JV) portfolio was established over a decade Joint venture and associates’ 2018 2017 ago to promote industry transformation and optimise resource operations extraction. These are primarily underground mines and are not Fatalities Number 3 2 operationally managed by Amplats. Mined ore is processed into TRCFR Rate/ 7.73 8.34 concentrate at each mine. Amplats claims its portion and acquires million hrs the JV partners’ portion of concentrate under purchase Platinum produced (000 oz) 000 oz 647 671 agreements. Total PGM production 000 oz 1,331 1,395 In line with our strategy, we continue to restructure the JV portfolio: Joint-venture operations* •• 2012: Marikana placed on care and maintenance •• 2016: Our 42.5% share of Pandora sold to Lonmin Net sales revenue R million 5,971 5,050 •• 2017: Bokoni placed on care and maintenance EBITDA R million 1,006 1,618 •• 2018: Union Mine sold to Siyanda Resources EBITDA margin % 27.1 19.9 Sold our 33% share of BRPM to Royal Bafokeng Platinum. ROCE % 37.2 10.3 Economic free cash flow R million 1,138 405 SAFETY In collaboration with our JV partners, we strive to create a zero-harm Net cash flow R million 1,100 373 environment in our operations to enable a sustainable business. Cash on-mine cost/ R/tonne 1,055 1,061 The TRCFR improved 7% to 7.73 in 2018 (8.34 in 2017). The tonne milled JV operations regrettably recorded three fatalities in 2018, one at Cash operating cost/ R/PGM oz 9,202 9,079 Kroondal and two at BRPM (two in 2017). PGM oz produced Cash operating cost/ R/Pt oz 20,582 20,416 Safety achievements during the year included: Pt oz produced •• Modikwa achieved 1 million fatality-free shifts in June 2018. * Data excludes Mototolo as a 100%-owned operation in 2017 and 2018 for OPERATIONAL REVIEW comparative reasons. In association with our JV partners, the focus for the last eight years has been on supporting these mines to achieve operational Total PGM production (M&C) (000 oz) excellence. A dedicated Amplats team assists the JV operations 1,331 1,400 1,279 1,212 with project execution, mining engineering, improving the cost base 1,200 1,129 1,135 314 289 304 and safety performance. 1,000 266 273 370 800 358 We thank our managing JV partners for their contributions in 2018, 313 315 338 600 despite another tough operating and financial environment. The 400 617 portfolio remains focused on its strategic objectives: 550 547 585 647 200 •• Rebuild operations to match installed capacity 0 •• Secure future sustainability and profitability 2014 2015 2016 2017 2018 ■ Platinum ■ Palladium ■ Other PGMs •• Rationalise the portfolio in line with Amplats’ strategy. PGM production from the JVs and associates (including mined and Cash operating cost/PGM ounce produced purchased production) was 5% below 2017 at 1,331,300 ounces,
mainly due to placing Bokoni on care and maintenance 10,000 9,079 9,202 8,479 8,427 8,562 (116,900 ounces in 2017), and selling our share of BRPM from 30 8,000 November resulting in the exclusion of 31,800 ounces from BRPM. 6,000 Increased production at Kroondal (+7%) and Modikwa (+1%) for the year. Year on year, platinum production dropped 4% to 646,700 4,000 ounces, rhodium dropped 4% to 100,800 ounces and palladium 2,000 dropped 7% to 370,100 ounces. Collectively, our JVs and 0 associates maintained their contribution to total concentrate 2014 2015 2016 2017 2018 ounces in 2018 at 26% (28% in 2017).
KEY FEATURES Our attributable JV cash on-mine costs (mining and concentrating) rose 5% to R4.1 billion, mainly due to higher production as well as • Solid operational performance across the joint venture the purchase of Mototolo ore at Modikwa. Attributable cash portfolio operating cost per PGM ounce increased 1% to R9,202 (R9,079 • Union disposal finalised 31 January 2018 in 2017) and cost per platinum ounce increased 1% to R20,582 • BRPM disposal completed – 30 November 2018 (R20,416 in 2017). • Three fatalities at joint ventures. Attributable capital expenditure for the JV mines in 2018 was R247 million (R358 million in 2017), of which R38 million was for replacement projects and the balance for stay-in-business projects.
Anglo American Platinum Limited Integrated Report 2018 67 PILLAR OF VALUE: PRODUCTION
OPERATIONS OVERVIEW CONTINUED
JOINT VENTURES AND ASSOCIATES CONTINUED MODIKWA PLATINUM MINE (Non-managed – 50% owned) 2018 2017 KEY FEATURES
Safety • Modikwa achieved 1 million fatality-free shifts in June 2018 Fatalities Number – 1 • Continued growth in ounces since South 2 shaft came online TRCFR Rate/ 6.46 5.36 in 2016. million hrs MINE OVERVIEW Total PGM production 000 oz 330 326 Modikwa is an independently managed, equal JV between ARM Net sales revenue R million 2,138 1,817 Mining Consortium and Rustenburg Platinum Mines in Limpopo, EBITDA R million 566 361 25km west of the town of Burgersfort. It forms part of the Eastern EBITDA margin % 26.4 19.9 Limb of the Bushveld complex and operates under a mining right ROCE % 23.2 12.1 covering 140km2. The current infrastructure comprises three Economic free cash flow R million 381 166 primary decline shafts (North 1, South 1 and South 2), three adits Net cash flow R million 343 89 on Onverwacht Hill and a concentrator with MIG (mainstream inert Cash on-mine cost/ R/tonne 1,220 1,252 tonne milled grinding) plant. The mine is a hybrid operation using conventional breast stoping with strike pillars, supported by trackless Cash operating cost/ R/PGM oz 9,814 9,259 PGM oz produced development and ore clearance. It extracts UG2 reef from surface Cash operating cost/ R/Pt oz 24,883 23,792 to 450m below the surface. Pt oz produced SAFETY MINERAL RESOURCES INCLUSIVE OF ORE RESERVES Modikwa remained fatality-free in 2018 and achieved 1 million Merensky 106.4 Mt 9.2 (4E) Moz fatality-free shifts in June 2018. TRCFR however regressed by 20%. Actions initiated to address safety regression include the UG2 133.3 Mt 25.8 (4E) Moz following: JV PARTNER •• Workplace audits, which provide for visible ‘felt’ leadership and ARM Mining Consortium Limited 50% PTOs culminating in ‘stop and fix’ of substandard workplaces is embedded Total PGM production (M&C) (000 oz) •• Extensive housekeeping programme, which includes upgrading the mine water reticulation system is in progress 350 326 330 296 •• Upskilling of mining crews on early entry examination practices is 300 265 271 76 77 69 250 60 63 being conducted 200 123 123 •• Management systems, with roles and responsibilities, to change 112 150 100 103 safety behaviour culture has been implemented. 100 130 50 105 105 115 127 OPERATIONAL REVIEW 0 Attributable PGM production, including 164,800 ounces purchased 2014 2015 2016 2017 2018 ■ Platinum ■ Palladium ■ Other PGMs from the JV partner, rose 1% to 329,700 ounces. Platinum production was up 3% at 130,040 ounces. Despite a slow start to Cash operating cost/PGM ounce produced the year, due to community unrest that affected work attendance in March and a bus-arson incident in April, Modikwa improved its 10,000 9,814 9,185 9,189 9,226 9,259 performance through underground efficiencies as well as the 8,000 purchase of Mototolo ore of 12,300 PGM ounces (9,700 ounces 6,000 in 2017). 4,000 Productivity of 71.2 PGM ounces was up 5% on the prior year. 2,000 Cash operating cost per PGM ounce was up 6% to R9,814 and up
0 5% per platinum ounce to R24,883, mainly due to the purchase of 2014 2015 2016 2017 2018 Mototolo ore included as an on-mine cost.
CAPITAL EXPENDITURE Our attributable share of capital expenditure for the year was R103 million, down 35% on 2017. Activities associated with the ongoing UG2 North 1 shaft phase 2 project (developing and equipping 9-level) resumed in the first quarter of 2017, with forecast completion in 2019. The South 2 phase 1 project was concluded in the first quarter of 2018. 68 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
KROONDAL PLATINUM MINE (Non-managed – 50% owned) 2018 2017 KEY FEATURES Safety • One fatality on 28 February 2018 Fatalities Number 1 – • TRCFR of 7.40 improved 21% • Record hoisted tonnes and PGM production. TRCFR Rate/ 7.40 9.41 million hrs MINE OVERVIEW Total PGM production 000 oz 624 586 Kroondal is a 50:50 pooling-and-sharing agreement between Net sales revenue R million 3,833 3,233 Sibanye-Stillwater and Rustenburg Platinum Mines, managed by EBITDA R million 1,052 646 Sibanye-Stillwater. It is in North West province, some 10km outside EBITDA margin % 27.4 20.0 the town of Rustenburg, and up-dip of Rustenburg Platinum Mines. ROCE % 54.4 8.3 Kroondal forms part of the South-western Limb of the Bushveld Economic free cash flow R million 757 284 complex and operates under a mining right covering 22km2. Net cash flow R million 757 284 Current infrastructure comprises five decline shafts and two Cash on-mine cost/tonne R/tonne 979 977 milled concentrators. Kroondal is a partly mechanised bord-and-pillar Cash operating cost/ R/PGM oz 8,878 8,979 operation mining UG2 reef exclusively up to a depth of 450m PGM oz produced below surface. Cash operating cost/ R/Pt oz 18,696 18,881 SAFETY Pt oz produced Kroondal recorded a fatality in 2018, detailed in our supplementary MINERAL RESOURCES INCLUSIVE OF ORE RESERVES report. Overall safety performance improved, with a TRCFR of UG2 10.3 Mt 1.0 (4E) Moz 7.40 down by 21%. JV PARTNER OPERATIONAL REVIEW Sibanye Platinum 50% PGM production attributable to Amplats, including 312,200 ounces purchased from our JV partner, rose 7% to 624,400 ounces. Total PGM production (M&C) 000 oz Platinum produced rose 6% to 296,500 ounces, supported by record delivered tonnes. Improved production mainly reflects 700 624 improved underground efficiencies and improved concentrator 576 586 600 535 552 170 recoveries. Productivity at 81.2 PGM ounces improved 6% on the 500 151 157 159 145 prior year on higher production. Cash operating cost per PGM and 400 157 145 148 300 134 138 platinum ounce was down 1% to R8,878 and R18,696 respectively. 200 256 274 279 297 100 263 CAPITAL EXPENDITURE 0 Our attributable share of capital expenditure at R144 million 2014 2015 2016 2017 2018 decreased by 28% from 2017. ■ Platinum ■ Palladium ■ Other PGMs
Cash operating cost/PGM ounce produced
10,000 8,979 8,878 8,128 8,053 8,221 8,000
6,000
4,000
2,000
0 2014 2015 2016 2017 2018
Anglo American Platinum Limited Integrated Report 2018 69 PILLAR OF VALUE: PRODUCTION
OPERATIONS OVERVIEW CONTINUED
JOINT VENTURES AND ASSOCIATES CONTINUED BAFOKENG RASIMONE PLATINUM MINE (BRPM) On 5 July 2018, Rustenburg Platinum Mines Limited accepted an offer from Royal Bafokeng to buy its 33% interest in BRPM. The (Non-managed – 33% owned) 2018 2017 transaction was effective on 30 November 2018. Safety SAFETY Fatalities Number 2 – BRPM recorded two fatalities in 2018, detailed in our TRCFR Rate/ 9.51 10.17 supplementary report. million hrs OPERATIONAL REVIEW Financial Attributable PGM production, including third-party purchase in Amplats’ attributable profit/ R million 112 134 December, rose 11% to 409,000 ounces, and platinum production (loss) before tax was up 13% to 239,000 ounces. The mine achieved its highest Net cash distributions/ R million (582) (444) PGM production and record delivered and milled tonnages. (cash calls) Additional ounces delivered reflect higher production from both North and South shafts and the ramp-up at Styldrift shaft. Net cash MINERAL RESOURCES INCLUSIVE OF ORE RESERVES calls for the period were R582 million (2017: R444 million) to Merensky 49.6 Mt 11.9 (4E) Moz support Styldrift capex requirements. UG2 65.2 Mt 10.7 (4E) Moz MARIKANA PLATINUM MINE JV PARTNER (Non-managed – 50% owned) 2018 2017 Royal Bafokeng Platinum Limited 67% * Sale completed on 30 November 2018, BRPM is represented as an MINERAL RESOURCES INCLUSIVE OF ORE RESERVES associate till date of sale and as a third party from 1 December 2018. UG2 20.8 Mt 2.2 (4E) Moz Total PGM production (M&C) (000 oz) JV PARTNER Sibanye Platinum 500 50% 409 400 367 340 MINE OVERVIEW 329 312 300 Marikana is a 50:50 pooling-and-sharing agreement between Sibanye-Stillwater and Rustenburg Platinum Mines, managed by 200 Sibanye-Stillwater. It is in North West province, 12km outside the 100 town of Rustenburg. It forms part of the South-western Limb of the 2. 0 Bushveld complex and operates under a mining right of 33km 2014 2015 2016 2017 2018 Mine infrastructure, comprising four decline shafts and a concentrator, was placed on care and maintenance in 2012 on KEY FEATURES depletion of mineable ore reserves, high operating costs and a decreasing commodity price. The open pit was mined out and • BRPM disposal completed – 30 November 2018 closed in 2011. • Regrettably two fatalities in 2018 • Record hoisted tonnes, milled tonnes and PGM production. BOKONI PLATINUM MINE (Non-managed – 49% owned) 2018 2017 MINE OVERVIEW BRPM is a 67:33 JV between Royal Bafokeng and Rustenburg MINERAL RESOURCES INCLUSIVE OF ORE RESERVES Platinum Mines, managed by Royal Bafokeng Platinum Merensky 169.7 Mt 27.0 (4E) Moz Management Services. The mine is in North West province, 25km UG2 228.1 Mt 48.1 (4E) Moz north of the town of Rustenburg. It forms part of the Western Limb of the Bushveld complex and operates under a mining right JV PARTNER covering 87km2. Current infrastructure comprises two decline Atlatsa Resources 51% shafts, North and South, a vertical shaft, Styldrift 1 shaft, a 250,000tpm concentrator and the recently acquired 110,000tpm MINE OVERVIEW Maseve concentrator. The Styldrift 1 main and service shafts are Bokoni is a 51:49 JV between Atlatsa and Rustenburg Platinum operational, with 600-level currently hosting 12 trackless Mines. The mine is in Limpopo, 80km southeast of the town of production crews building up reef production to 150,000tpm. The Polokwane. It forms part of the North-eastern Limb of the Bushveld primary reef mined is Merensky, with limited mining of UG2 reef at complex and operates under a mining right covering 147km2. both shafts. The mining method is conventional breast stoping with Current mining infrastructure, comprising two decline shafts strike pillars, with an operating depth for current workings of 50m to (Middelpunt Hill and Brakfontein) and two concentrators, was 500m below surface. Acquisition of the Maseve plant has increased placed on care and maintenance in October 2017. The older concentrating capacity to 360,000tpm. Vertical and UM2 shafts were closed in 2015. The opencast operation was terminated in December 2016 and rehabilitation began in January 2017.
70 Anglo American Platinum Limited Integrated Report 2018 PROCESS REVIEW PERFORMANCE REVIEW
The process division comprises our smelting, converting and refining operations. Primary smelting furnaces are located at Polokwane, Swartklip (Mortimer), Rustenburg (Waterval) and Shurugwi (Unki), while the converting (ACP), base metals refining (RBMR) and precious metals refining (PMR) operations are all in Rustenburg. Process division receives PGM concentrates from own, joint venture and third- party mines, and refines these to final base metal and precious metal products.
Intellectual capital Amplats owns the best processing assets in the South African PGM industry – we are now working smarter to deliver world-class operating practices
Anglo American Platinum Limited Integrated Report 2018 71 PILLAR OF VALUE: PRODUCTION
PROCESS REVIEW CONTINUED
SMELTERS KEY FEATURES 2018 2017 End-of-campaign rebuild of Zero Safety fatalities Mortimer Fatalities 0 1 smelter TRCFR 4.00 5.55 and side and end-wall Tonnes smelted excluding Mt 1.38 1.45 15% tolling improvement in TRCFR replacements at Polokwane smelter completed Cash costs/tonne new R/tonne 2,684 2,197 concentrate smelted PMR excluding tolling Unki Refined platinum production smelter commissioned in largely unchanged at The primary smelters treat PGM concentrates received from Q3 2018 2.36 million oz pt. wholly owned, joint venture and third-party mines to produce furnace matte which is transferred to ACP for further treatment. ACP phase A ACP upgrades furnace matte by removing iron and sulphur, and returned to service in Q3 2018 produces a PGM-rich converter matte which is slow-cooled before being despatched to the base metal refinery for further processing. SAFETY The converting process produces sulphur dioxide gas which is We continue to record improved safety performance by captured and treated at the ACP acid plant, producing implementing our SHE strategy as well as reporting and learning sulphuric acid. from high-potential Incidents, which have informed our strategy and SAFETY approach to managing our operations. The TRCFR of 3.12 is a Two of the four smelting operations recorded zero injuries for the 15% improvement on 2017, consistent with the increased focus year – Polokwane, which has now achieved four years without a on key risks and safe behaviour on the journey to zero harm. lost-time injury, and Unki. The combined TRCFR for all smelting OPERATIONAL REVIEW operations improved by 28% to 4.00 in 2018 from 5.55 in 2017. With an unusually high number of planned maintenance activities in Despite these achievements, the overall safety performance at 2018 (detailed under smelters), operations ran close to design the smelters was below expectations. limits to deliver the required throughputs. A highlight for the year A safety improvement strategy is in place, with specific focus on was the successful construction and commissioning of the new rebuild projects and non-routine work, analysing leading indicators Unki smelter in September 2018. and high-potential incidents, eliminating low-frequency/high- Rustenburg Base Metal Refinery (RBMR) and Precious Metals impact events, and the role of leadership in driving our safety Refinery (PMR) refined the required volumes in line with their culture. Routine wellness activities are an integral part of the plan inputs. Continuing improvement at RBMR allowed nickel quality to to improve the health of employees. reach 90% at LME (London Metals Exchange) grade. PRODUCTION Total cash operating cost increases were contained to 13% by Smelted volumes decreased 5% year on year. This was largely due disciplined cost management to mitigate higher chemical and to extensive scheduled maintenance during the year, including a energy prices, as well as increased maintenance activities to secure full end-of-campaign rebuild of Mortimer furnace, complete side improved asset integrity. Internal cost-management and business- and end-wall replacement at Polokwane furnace, and scheduled improvement initiatives continued to deliver value during the year, maintenance of the slag-cleaning furnace at Rustenburg. with the focus on energy efficiency and working capital The Unki smelter in Zimbabwe was successfully commissioned in management. the third quarter. The ramp-up has progressed well, and the furnace CAPITAL EXPENDITURE is currently treating all concentrate produced at Unki Mine. Capital expenditure rose 63% to R1.7 billion, with 79% allocated to The ACP A converter unit, damaged in a steam explosion in 2017, projects in our smelting operations (detailed above) and 13% was successfully returned to service in the third quarter, after for Base Metals Refinery (BMR) projects. successful completion of repair work and the switch in operation from ACP phase B. COSTS Total cash operating costs rose 16% to R3.7 billion. The unit cash cost per tonne of concentrate smelted was 22% higher at R2,684 (2017: R2,197) due to lower volumes smelted, and higher stores cost from the increased focus on maintenance.
72 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
CAPITAL EXPENDITURE OUTLOOK Capital expenditure was up 88% to R1.3 billion. RBMR has improved operational excellence and alignment with the Amplats strategy by successfully rolling out the Anglo American Construction of the SO abatement plant at Polokwane smelter 2 operating model to unlock additional operational efficiency began in August 2018. Expenditure on this project, which is improvements. scheduled for completion in 2020, totalled R370 million in 2018. Stay-in-business capital was invested in repairs to ACP phase A PRECIOUS METALS REFINERY (PMR) (R331 million), Mortimer furnace rebuild (R156 million), Polokwane furnace side and end-wall replacement (R123 million) 2018 2017 and long-lead item procurement for the 2019 side and end-wall Safety replacement at Waterval (R55 million). Fatalities 0 1 OUTLOOK TRCFR 2.13 2.32 The journey to zero harm will continue in 2019, with emphasis on Platinum production Moz 2.36 2.35 eliminating low-frequency, high-impact incidents. The primary Cash costs/Pt oz R/oz 400 335 smelting furnaces at Waterval, EF1 and EF2 are scheduled for end-wall, and side and end-wall replacements in H1 2019 PMR receives final concentrate from the magnetic concentrator respectively. The side-wall refractory of Unki furnace will also be plant at RBMR, which is refined into various high-purity PGMs and replaced in 2019 as per the planned maintenance strategy. semi-refined gold to meet market requirements. RUSTENBURG BASE METAL REFINERY (RBMR) SAFETY AND HEALTH TRCFR improved 8% to 2.13 in 2018, reflecting the operation’s 2018 2017 intensified focus on its comprehensive safety improvement plan. Safety Platinum salt sensitivity (PSS) and rhodium salt sensitivity (RSS) Fatalities 0 0 remain the major health risks at PMR. These risks are being TRCFR 2.84 2.57 mitigated by implementing world-class occupational and Base metal production kt 33.6 37.2 environmental exposure-control standards which characterise Cash costs/base metal tonne R/tonne 67,220 49,882 the workplace in terms of PSS and RSS, and by ensuring regular measurements to monitor changes in the work environment RBMR performs bulk separation of precious metals from base and the personnel working at PMR. No PSS or RSS cases were metals using milling and magnetic separation at the magnetic recorded in 2018. concentrator (MC) plant. The PGM-rich magnetic fraction is upgraded in a three-stage leaching process to produce a final PRODUCTION The refinery operated steadily throughout the year and met all concentrate, fed to the PMR. The non-magnetic fraction is treated customer requirements. Refined platinum production rose 1% to at BMR to produce base metal products – nickel and copper 2,360,900 ounces (2017: 2,347,700 ounces). PGM production cathode, cobalt sulphate and a sodium sulphate by-product. decreased by 2% to 4,418,000 ounces (2017: 4,521,900 ounces) SAFETY in line with the relevant ratios in the feed received. Safety performance at RBMR deteriorated slightly year on year, with TRCFR increasing from 2.57 in 2017 to 2.84 in 2018. The MC plant PRODUCT QUALITY Platinum, palladium and rhodium purity continued to meet market achieved two years injury-free in 2018. specifications. PMR maintained 99.99% purity platinum and PRODUCTION palladium, and 99.98% purity rhodium for the review period, The RBMR complex operated stably throughout 2018. Annual base delivering good customer satisfaction levels. metal production was affected by lower converter matte receipts and production was therefore down 10% to 33,600 tonnes. The COSTS PMR’s cash operating costs for 2018 rose 19% to R945 million, operation continued to make progress on improving efficiencies, largely associated with above-inflationary increases in key input debottlenecking capacity and other continuous improvement commodities and an increase in allocated centralised costs. activities. Full-year nickel production was 10% lower than 2017, but quality improved to over 90%, passing LME grade. CAPITAL EXPENDITURE Capital expenditure was 11% higher at R130 million. All capital was COSTS invested in stay-in-business projects to ensure the ongoing integrity Cash operating costs increased to R2.2 billion in 2018. The 22% of the asset and future business continuity. increase in absolute costs was mainly due to higher chemical and energy prices as well as the normalisation of environmental OUTLOOK rehabilitation costs. Cash operating cost/base metal tonne for 2018 PMR is expected to continue operating stably and well within its rose 35% from R49,882 in 2017 to R67,220 in 2018 on lower nameplate refining capacity. No major maintenance work is inputs and additional above-inflation costs in the review period. anticipated for 2019. Opportunities to improve raw material efficiencies and reduce operating costs through enhanced CAPITAL EXPENDITURE operating and asset maintenance strategies will be explored Stay-in-business capital expenditure was 6% higher at in the coming year. R213 million. Capital spend is focused on replacing critical plant equipment to secure operational stability.
Anglo American Platinum Limited Integrated Report 2018 73 PILLARS OF VALUE
In line with our purpose to re-imagine mining to improve people’s lives, we closely monitor how the value we create is shared with all stakeholders. Our approach to the sustainability (non-financial) aspects of our business is summarised below and detailed in our supplementary report. This approach aligns closely with the IIRC six-capitals framework (see table on page 2), although Amplats has elected to report against its pillars of value as key performance indicators for each pillar are integral to our performance-based remuneration structure.
Intellectual capital By combining the intellectual capabilities of our people with the benefits of technology and innovation, we are developing solutions that create value for all our stakeholders
74 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
Each value lever has strategic focus areas that aim to deliver SOCIO-POLITICAL positive social impacts and enhance social capital (detailed in our Maintaining and improving our social licence to operate depends on supplementary report). our ability to enhance this pillar at all levels of our society. While a At the same time, we remain focused on meeting our commitments licence to operate is a tangible, regulated entity, the social licence to in our 2016-2020 social and labour plans (SLPs). Our stakeholders operate is a fluid concept more easily identified by its lack, rather are more involved in the delivery of SLPs and we continue to than its presence. Social capital itself is the outcome of our monitor and evaluate the impact of each project. investment into building relationships with all stakeholders. Stakeholder engagement was an important focus in 2018, with Granting, rejecting or withdrawing a social licence to operate is a Amplats responding to the needs of diverse stakeholders, and stakeholder group’s response to the extent of that social capital enhancing inclusivity through stronger and more effective (positive or negative), which in turn supports our legitimacy, relationships. We built the foundations of effective engagement by credibility and trust. setting up community forums and concentrated on stabilising our relationships with government and communities. We are working NEW 2018 SOCIAL STRATEGY In 2018, our social strategy was redesigned to adapt to the with interfaith groups as a trusted and credible stakeholder in the changing needs of our business and better meet the needs of our community and ensuring faith leaders have input in rebuilding stakeholders. It clearly defines our objective to enable a sustainable communities. Although some issues persisted, we remained business by enhancing our social licence to operate through committed to effective engagement processes. engaged and empowered stakeholders, and enshrines three value levers (or pillars): •• Socio-economic development •• Stakeholder engagement and communication •• Sustainable development.
AMPLATS’ SUSTAINABILITY NARRATIVE In 2018, Amplats began the extensive process of integrating and The Anglo American sustainability strategy, launched in embedding its parent’s sustainability strategy into existing March 2018, focuses on three global sustainability pillars: being business processes. This led to developing a sustainability a trusted corporate leader, creating thriving communities and narrative – an overview of how we are embedding sustainability creating a healthy environment. Each has global stretch goals in our organisation, and guided by an implementation to be accomplished by 2030. The collaborative regional framework. The culmination of these processes will be five-year development programme (stimulating regional socio-economic site, social and sustainability plans detailing how the ambitious development opportunities through collaborative partnerships) goals of the Anglo American sustainability strategy will be is part of this strategy. achieved. It is underpinned by critical foundations or business-as-usual MAPPING OUR CONTRIBUTIONS TO practices. UN SUSTAINABLE DEVELOPMENT GOALS At the heart of the 2030 agenda for sustainable development are 17 sustainable development goals (SDGs), which are a global call to action to end poverty, protect the planet and ensure peace and prosperity for all people. The UN’s SDGs are a key determinant to the way in which our parent’s sustainability strategy is being implemented at Amplats. As part of the process, we mapped the company’s financial contributions to SDGs in 2018. The baseline assessment revealed that 77% of our 2017 financial contributions went to 12 of the 17 SDGs. The most significant contributions are for SDG 8 (decent work and economic growth) at 20.4%, SDG 1 (no poverty) at 11.6% and SDG 9 (industry innovation and infrastructure) at 7.4%. These findings are congruent with our focus on job creation and infrastructure development. Our executive committee provided guidance on the SDG baseline, and made recommendations for improvement. Work will continue in 2019 on the SDG mapping initiative, focusing on impacts rather than financial inputs.
Anglo American Platinum Limited Integrated Report 2018 75 PILLARS OF VALUE CONTINUED
We are implementing a strategy to build a digital talent and learning SAFETY AND HEALTH capability to rapidly convert large groups of current employees from Our goal is zero harm, and based on being the leader in safe and conventional to modernised equipment. Our employees of the sustainable mining, respected and trusted by partners and future will be appropriately skilled to work with: communities. To achieve this strategic objective, we have defined •• Immediate, remote expert assistance and real-time guidance focus areas for safety and health: •• In-depth technical knowledge of machinery •• Data-rich analysis and interpretation Safety – creating a leadership approach and culture conducive to •• Cognitive and visio-spatial abilities innovation and improving safety performance; eliminating fatalities; •• Ability to apply more complex skills by monitoring equipment and building a safety culture; moving the hierarchy of controls through problem solving modernisation, innovation and engineering capability •• Advanced technology design, engineering and maintenance Health – workplace health risk management (occupational •• Strong analytical and technological skills. hygiene) by eliminating exposures to harmful substances; TRANSFORMING THE WORKPLACE integrated health programme (occupational medicine) including Transforming the workplace to reflect the diversity of South Africa’s HIV and TB prevention and community health. population and comply with mining charter requirements is a key business imperative. PEOPLE We continue to successfully diversify our workforce through Our strategy for our people rests on key pillars and desired targeted recruitment and development campaigns for designated outcomes: groups, while acknowledging the national challenge of meeting representative targets for skills at managerial level. Our progress We have a dual approach protecting and enhancing our human against mining charter requirements is summarised below: capital: •• Enabling modernisation and mechanisation through digital talent Transforming our workplace (%) and learning capability
•• Transforming the workplace to reflect the diversity of 90 South Africa’s population. 80 70 ENABLING MODERNISATION 60 Introducing new mining technologies and methods gives us a 50 significant opportunity to improve performance efficiency and 40 safety, but these require new and different skill sets. This is an 30 20 employee who is both technical expert and machine operator, 10 with in-depth technical knowledge of the machinery as well as the 0 Management Core and Females People with cognitive and visio-spatial abilities to manage underground critical skills disabilities equipment safely and effectively via a remote-control unit in a very ■ 2018 ■ 2017 Mining charter confined underground space. The traditional approach to talent identification, assessment and development is therefore not an option for this large-scale, broad-based transformation.
76 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
ENVIRONMENT In the transition to a low-carbon economy, PGMs are critical to enable associated technologies. In delivering these products, we are committed to dramatically reducing our environmental footprint over the next decade. This will require a fundamental change in the makeup of our mining operations and processes. Many of the environmental impacts of mining are borne by communities around our operations, while other activities contribute to global challenges such as climate change. By implementing best-practice standards, we aim to achieve and surpass basic legal compliance. We have set ambitious goals for 2030 on water, climate change and biodiversity performance, detailed in our supplementary report. Many of the technological innovations we will apply to achieve the desired step-change in our water and energy performance are at various stages of development. This is underpinned by best practice policies, performance standards and business processes; investing in internal capacity, capability and technological innovation; as well as partnerships and collaboration with stakeholders. INTELLECTUAL CAPITAL Our intellectual capital embodies the combined skills of our people and ongoing innovation across our business – from inputs to outcomes – that will underpin our sustainability as a relevant, responsible organisation for the long term. As our industry continues its fundamental transformation, we believe intellectual capital will be the key differentiator. As Amplats continues to mechanise and modernise, innovation is driving the way we think about decades-old processes and practices to achieve our aim of world-class standards. This is encapsulated in our purpose to re-imagine mining. To date, innovative thinking has delivered significant benefits: •• By implementing a new operating model, Mogalakwena has recorded an operational improvement of 35% •• Amandelbult introduced innovative roof support and lighting as part of embedding the operating model and a new conventional mining system •• Unki improved concentrator recoveries while reducing mass pull, decreasing the volume to be smelted •• We acquired our partner’s interest in Mototolo to unlock the potential of our adjacent Der Brochen project and capitalise on its +30–year life of mine.
Anglo American Platinum Limited Integrated Report 2018 77 SUSTAINABILITY COMMITMENTS for the year ended 31 December 2018
Objective areas 2018 target 2018 performance year end Safety and health Zero fatalities Two fatalities TRCFR (per million hours) lower than 3.01 3.00 TRCFR per million hours worked (15% BU improvement target) Includes Union Mining Complex (divested 31 January 2018) LTIFR (per million hours) lower than 2.07 2.10 LTIFR per million hours worked (15% BU improvement target) Includes Union Mining Complex Note: No longer a targeted metric for Anglo (divested 31 January 2018) American Platinum HIV management: 90% of at risk population 88% of employees know their HIV status knowing their status HIV management: 90% of HIV-positive 90% of known HIV-positive employees are on undergoing treatment (on ART) ART TB incidence rate of below 600 per 100,000 Average annualised TB incidence rate of 325 per 100,000 employees Medical surveillance: 100% annual medical 100% medical surveillance of Cat A surveillance of persons potentially at risk of employees (excludes Unki) exposure to airborne pollutants (Cat A) Mineral policy and 26% ownership of Reserves and Resources 43% of the business transferred to HDSAs legislative compliance by historically disadvantaged South Africans (using 2017 production units and taking into (HDSAs) account the disposal of Union in 2018) HDSA procurement expenditure: Capital goods (40%) 73% Services (70%) 79% Consumables (50%) 70% HDSA in: Top management (board) level: 40% 33% Senior management (including exco): 40% 50% Middle management: 40% 69% Junior management: 40% 82% Core skills: 40% 87% Women in mining: 18% HDSAs in management: 40% 78% Maintain ISO 14001 certification: 100% Rustenburg Base Metals Refinery (RMBR) renewal of certificates for RBMR and PMR and Precious Metals Refinery (PMR), which are responsible for product delivery and compliance to external requirements, have environmental management systems certified against the new ISO 14001:2015 standard Zero environmental legal non-compliance On target – no directives received directives
78 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
Objective areas 2018 target 2018 performance year end Labour relations and our Target of 106 PGM ounces produced per Achieved – 108.1 PGM ounces produced per performance employee employee Labour unavailability to be below 18.5% The total absence rate for 2018 is 20% including annual leave of 8.3% (year-on-year increase in annual leave of 0.45% due to enhanced leave smoothing processes). Several long-term initiatives are under way aiming at improved productivity. Community development Implementation of second generation SLP In progress – The approval of SLP 2 for Amandelbult and Der Brochen are still pending 1% after-tax profit to be spent on community Total social investment was R609 million which development is 9% of NOPAT (excluding Unki). Access to and allocation of 3% reduction target for energy consumption •• Energy consumption of 20.01 million GJ natural resources to be achieved for the period 2016 to 2020, •• Energy intensity of 0.79GJ per tonne milled driving a 1% reduction per annum: •• 2018 absolute consumption target of 19.3 million GJ •• 2018 energy intensity target of 0.83GJ per tonne milled 5% reduction in CO₂ emissions per unit of CO₂ equivalent emissions of 4.1Mt CO₂e or production for the period 2016 to 2020, 0.16t CO₂e per tonne milled equating to a 1% reduction per annum. (Scope 1 and 2 only) Note: Not a 2018 targeted metric for Anglo American Platinum 9.5% reduction in water consumption •• Total water withdrawal of 24.43Mm3 (2.7Mm3) against the 2020 BAU projected •• Potable water withdrawal of 6.14Mm3 demand (28.5Mm3). •• Total water withdrawal intensity of 0.96m3 •• 2018 total new water abstraction or per tonne milled withdrawal target of 27.8Mm3 •• 2018 potable water abstraction target of 9.5Mm3 •• 2018 total new water withdrawal intensity target of 1.08m3 per tonne milled Achieved/on target Not achieved/below target In progress
Anglo American Platinum Limited Integrated Report 2018 79 KEY STATISTICS for the year ended 31 December 2018
SAFETY Number of fatalities Fatal-injury frequency rate (FIFR)1 Operations 2018 2017 2016 2015 2014 2018 2017 2016 2015 2014 Tumela Mine – 1 2 – – – 0.056 0.110 – – Dishaba Mine 2 2 – – 1 0.144 0.135 – – 0.143 Union Mine2 – 1 1 – – – 0.103 0.101 – – Mogalakwena Mine – – – – – – – – – – Unki Platinum Mine – – – – – – – – – – Amandelbult concentrators – – – – – – – – – – Union concentrators2 – – – – – – – – – – Mogalakwena concentrators – – – – – – – – – – Unki concentrator – – – – – – – – – – Mototolo concentrator – – – – – – – – – – Mototolo Lebowa and Borwa shafts3 – – ACP – – – – – – – – – – Waterval smelter – 1 – – 1 – 0.664 – – 0.554 Mortimer smelter – – – – – – – – – – Polokwane smelter – – – – – – – – – – Unki smelter4 – – Rustenburg Base Metal Refiners – – – – – – – – – – Precious Metals Refinery – 1 – – – – 0.579 – – – Greenfield projects5 – – – 1 – – – – 0.144 – Total/aggregate6 2RA 6 7 2 3 0.027RA 0.073 0.067 0.017 0.031
Lost-time injury frequency rate (LTIFR)7 Total recordable case frequency rate (TRCFR)8 Operations 2018 2017 2016 2015 2014 2018 2017 2016 2015 2014 Tumela Mine (Amandelbult) 3.11 4.05 2.92 5.14 4.19 3.61 4.78 4.57 7.02 5.27 Dishaba Mine (Amandelbult) 3.38 2.69 3.14 4.66 4.29 4.53 4.44 4.76 9.13 8.01 Union Mine2 6.70 9.14 7.61 9.61 5.33 9.38 12.02 10.24 13.94 8.11 Mogalakwena Mine 0.45 0.68 0.85 1.08 0.58 0.79 1.35 2.26 6.27 5.02 Unki Platinum Mine 1.17 1.68 0.95 0.91 0.59 1.40 2.80 4.13 2.72 4.46 Amandelbult concentrators 0.82 4.05 1.51 1.24 – 2.45 6.30 3.03 4.14 1.84 Union concentrators2 – 1.55 1.31 1.63 – – 7.74 2.63 1.63 – Mogalakwena concentrators 1.18 0.81 0.78 0.53 1.86 1.18 1.29 2.34 4.54 5.57 Unki concentrator – – – 2.27 2.28 – – – 6.82 4.57 Mototolo concentrator – – 2.60 – – – – 2.60 – – Mototolo Lebowa and Borwa shafts3 – – ACP 4.14 3.05 1.06 1.95 2.96 6.90 3.05 1.06 1.95 4.94 Waterval smelter 1.96 3.32 2.60 – 5.54 2.61 7.30 3.25 1.06 7.20 Mortimer smelter 7.51 5.09 1.89 – – 7.51 6.78 5.67 3.71 3.71 Polokwane smelter – – – – 1.94 – 4.53 2.28 2.11 5.82 Unki smelter4 – – Rustenburg Base Metal Refiners 0.85 1.43 2.44 4.18 1.98 2.84 2.57 6.41 7.76 4.82 Precious Metals Refinery 2.13 1.16 6.03 2.62 1.31 2.13 2.32 7.23 5.90 5.88 Greenfield projects5 1.07 0.94 0.82 2.59 3.20 4.73 1.57 1.37 5.75 7.00 Total/aggregate6 2.10 3.17 3.65 4.92 3.46 3.00RA 4.52 5.28 7.59 6.09 1 FIFR – fatal injury frequency rate (calculated) is a measure of the rate of all fatal injuries per million hours worked. 2 Union Mine and concentrators sold on 31 January 2018. 3 Mototolo, Lebowa and Borwa shafts acquired from 1 November 2018. 4 Unki smelter operational from September 2018. 5 Greenfield projects 2018: Twickenham Mine, Amandelbult chrome recovery plant (module 3 and 4), Der Brochen exploration, infrastructure and prefeasibility projects, Eastern and Western Limb greenfields exploration (Eastern to end August), Unki housing infrastructure project, Unki smelter project, Mareesburg tailings facilities and SO2 abatement plant at Polokwane (from September 2018). 6 Rustenburg divested operations included to date of sale – 31 October 2016. 7 LTIFR – lost-time injury-frequency rate (calculated) is a measure of the rate of all lost-time injuries per million hours worked. 8 TRCFR – total recordable case frequency rate (calculated) is a measure of the rate of all injuries requiring treatment above first aid per million hours worked. RA Reasonable assurance provided by PwC. Refer to page 106 of supplementary report for the independent assurance report.
80 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
HEALTH 2018 2017 2016 2015 2014 New cases of noise-induced hearing loss 2RA 6 23 36 34 Employees who know their HIV status 17,955 20,173 22,222 32,375 41,822
New cases of occupational disease 2018 2017 2016 2015 2014 Noise-induced hearing loss 2 6 23 36 34 Chronic obstructive airways disease – – – – 2 Occupational tuberculosis – – – – – Occupational asthma 1 3 1 2 – Occupational dermatitis 1 3 1 1 – Occupational cancers – – – – – Platinosis (platinum salt sensitivity) – – 2 – –
Employees potentially exposed to hazards1 2018 2017 Total number of workers 34,462 37,946 Inhalable hazards and carcinogens Workers potentially exposed to inhalable hazards above the exposure limit 555LA 546 Workers potentially exposed to carcinogens above the exposure limit 527LA 518 Noise Total number of workers at risk of exposure to noise2 29,593 32,813 Workers potentially exposed to noise above 85dB(A) 18,639 21,468 1 Exposure is above the occupational exposure limit ‘A’ classification band (without taking PPE into account). 2 All workers, including long-term contractors, potentially exposed above the A, B, C and D exposure limit classification bands (without taking PPE into account). LA Limited assurance provided by PwC. Refer to page 106 of the supplementary report for the independent assurance report. RA Reasonable assurance provided by PwC. Refer to page 106 of supplementary report for the independent assurance report.
Anglo American Platinum Limited Integrated Report 2018 81 KEY STATISTICS CONTINUED for the year ended 31 December 2018
HUMAN RESOURCES EMPLOYMENT STATISTICS
2018 2017 2016 2015 2014
Breakdown of South African workforce Gauteng 213 255 278 330 377 Limpopo 16,177 22,010 21,692 23,259 24,822 North West 2,894 2,878 2,860 17,991 20,323 Mpumalanga 1,502 177 136 136 140 Total own employees 20,786 25,320 24,966 41,716 45,662 Contracting staff Labour hire 28 37 98 401 435 Contractors 1,916 2,201 2,090 2,171 2,422 Total contracting staff 1,944 2,238 2,188 2,572 2,857 Employment creation in provinces, numbers Gauteng 14 25 (52) (47) (40) Limpopo 259 651 (1,567) (1,563) 245 North West 195 144 (15,131) (2,332) (439) Mpumalanga 37 18 0 (4) 12 Total own employees 585 (16,750) (3,946) (222) Labour turnover in South Africa, % (including voluntary separation packages) Gauteng 0.11 0.25 0.15 0.20 0.06 Limpopo 4.24 4.77 5.13 4.54 1.61 North West 0.56 0.69 2.56 4.73 1.4 Mpumalanga 0.08 0.03 0.01 0.02 0.01 Labour turnover in Zimbabwe 0.21 0.19 0.14 0.12 0.15
EMPLOYMENT EQUITY PER OCCUPATIONAL LEVEL (2018 employment equity statistics as per Employment Equity Act requirements)
Male Female Foreign nationals Occupational levels African Coloured Asian White African Coloured Asian White Male Female Total Top management 0 0 1 5 2 0 0 0 0 0 8 Senior management 39 3 11 71 8 8 5 5 0 150 Professionally qualified and experienced specialist and mid-management 555 18 21 395 192 8 18 130 33 5 1,375 Skilled technical and academically qualified workers, junior management, supervisors 2,295 34 6 584 751 12 2 162 141 3 3,987 Semi-skilled and discretionary decision- making 10,811 6 0 74 2,010 2 1 12 1,180 1 14,097 Unskilled and defined decision-making 783 2 0 4 346 1 0 0 30 0 1,166 Total permanent employees 14,483 63 39 1,130 3,309 23 29 309 1,389 9 20,783 Temporary employees 596 1 0 62 122 1 3 14 65 0 864 Grand total 15,079 64 39 1,192 3,431 24 32 323 1,454 9 21,647 Note: All numbers are for the year ended 31 December 2017.
82 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
HUMAN RESOURCES continued EMPLOYMENT EQUITY AS PER MINING CHARTER
Description Measure 2018 progress against target Compliance target
Diversification of the workplace to Top management (board) level 33%RA 40% reflect the country’s demographics Senior management (including 50%RA 40% and remain competitive exco) Middle management 69%RA 40% Junior management 82%RA 40% Core skills 87%RA 40%
TURNOVER PER REGION 2018 2018 2017 2017 2016 2016 excluding VSPs including VSPs excluding VSPs including VSPs excluding VSPs including VSPs Total % Total % Total % Total % Total % Total %
Gauteng 19 0.09 23 0.11 60 0.23 65 0.25 33 0.09 61 0.15 Limpopo 747 3.47 913 4.24 1,211 4.67 1,235 4.77 976 2.53 2,055 5.13 Mpumalanga 17 0.08 17 0.08 8 0.03 8 0.03 5 0.01 6 0.01 North West 117 0.54 121 0.56 172 0.66 179 0.69 463 1.20 1,025 2.56 Zimbabwe 46 0.21 46 0.21 47 0.18 49 0.19 56 0.15 56 0.14 Grand total 946 4.39RA 1,120 5.20 1,498 5.78 1,536 5.93 1,533 3.98 3,203 8.00 RA Reasonable assurance provided by PwC. Refer to page 106 of supplementary report for the independent assurance report.
TRAINING IN 2018 Black Coloured Asian White Total HDSA Total Type of training Male Female Male Female Male Female Male Female trained trained
Graduates 53 29 1 0 2 1 16 8 94 110 Bursaries 35 26 0 0 6 2 20 9 78 98 Leaderships (engineering) 183 86 4 0 1 0 14 1 275 289
MEMBERSHIP OF RECOGNISED UNIONS AND ASSOCIATIONS 2018 2017 2016 2015 2014
Association of Mineworkers and Construction Union (AMCU) 9,886 13,691 24,382 24,815 26,916 National Union of Mineworkers (NUM) 5,670 6,378 8,200 9,463 9,560 United Association of South Africa (UASA) 2,157 2,630 5,827 6,518 5,077 National Union of Metalworkers of South Africa (NUMSA) 50 270 347 359 465 GIWUSA 917 Total 18,680 22,969 38,756 41,155 42,018 Total percentage of workforce represented, excluding management* (%) 94.8* 92 94 91 94 * Unki operations headcount excluded in denominator. Comparative figures (%) 95.74 96.88 96.67 93.73
Anglo American Platinum Limited Integrated Report 2018 83 KEY STATISTICS CONTINUED for the year ended 31 December 2018
HUMAN RESOURCES continued AVERAGE TRAINING HOURS IN 2018 Average training hours per employee 2018 2017 2016
Professionally qualified and experienced specialists and mid-management 28 39 46 Semi-skilled and discretionary decision makers 50 96 98 Senior management 19 11 10 Skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents 49 85 88 Unskilled and defined decision makers 108 101 80 Total per employee 50 90 91 SOCIAL R million 2018 2017 2016 2015 2014 Total Social Investment** 609 CSI spend# 264,16*RA 301.1 546 236 286 RA Reasonable assurance provided by PwC. Refer page 106 of supplementary report for the independent assurance report. * Excludes overhead costs. ** Total Social Investment- CSI spend including contributions paid to community trusts and dividends paid to communities. Payments to trusts and dividends paid to communities occurred in 2018. # Including Unki
ENVIRONMENTAL INDICATORS 2018 2017 2016 2015 2014
MATERIALS – kilotonnes Rock broken – managed operations (100%) 97,369 98,340 112,433 152,414 143,219 Ore milled – managed operations (100%) 25,378 26,066 37,165 36,305 29,593 Accumulated low-grade stockpiles 59,909 55,710 49,060 41,811 37,586 Coal 133.96 142.27 132.58 137.02 134.2 Liquid petroleum gas (LPG) 5.68 4.62 4.84 4.17 4.65 Grease 0.29 0.34 0.37 0.37 0.33 FUELS – megalitres 79.55 74.88 75.68 70.8 67.46 Lubricating and hydraulic oils 2.83 7.66 53.14 15.97 8.31 ENERGY – terajoules Energy from electricity purchased 13,402 14,889 18,112 18,751 16,376 Energy from processes and fossil fuels 6,609 6,608 6,516 6,428 6,257 Total energy consumed 20,011RA 21,497 24,628 25,178 22,633 WATER – megalitres Total water withdrawals# 24,433 26,533 32,687 33,197 27,137 Potable water from an external source 6,142 9,433 12,327 14,408 13,581 Non-potable water from an external source† 6,189 5,595 10,021 4,961 7,618 Surface water used 1,418 1,396 4,521 9,343 2,590 Groundwater used 10,684 10,110 5,826 4,695 3,369 Water recycled in processes††† 25, 783 28,791 54,631 60,170 51,462 LAND – hectares Land under company charge for current mining activities 98,374 109,299 108,202 117,266 116,792 Land under management control 41,594 43,240 42,142 46,644 53,042 Land used for current mining and related activities 7,539 8,600 7,903 10,321 8,612 Total tailings dam area 1,316 1,564 1,593 2,326 2,326 Total waste rock dump area 1,134 928 947 1,097 1,043 All land owned 13,685 13,685 13,685 21,154 33,543 # Total water withdrawals or abstractions (total water inflows). Water reporting requirements changed in 2017 to align with ICMM. Water use for primary and non-primary activities are no longer reported. † Non-potable water from external sources includes waste or second-class water (prior years). ††† Lower recycled water reported in 2017 is mainly due to sale of Rustenburg concentrator which accounted for over 40% of measured recycled streams in 2016. RA Reasonable assurance provided by PwC. Refer to page 106 of supplementary report for the independent assurance report.
84 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
ENVIRONMENTAL INDICATORS continued
2018 2017 2016 2015 2014
EMISSIONS – kilotonnes
GHG emissions, CO2e (scope 1 and 2 only) 4,118 4,612 5,579 5,878 5,363 From electricity purchased (scope 2 GHG emissions) 3,560RA 4,049 5,034 5,316 4,817 Internally generated – from fossil fuels (scope 1 GHG emissions) 558RA 563 545 561 547 Nitrous oxides NM 0,937 1,395 NM NM Sulphur dioxide** NM 14.78 23.97 19.66 15.46 Particulates (point sources) 0.03 0.04 0.18 0.16 0.15 DISCHARGE – megalitres Discharge to surface water 352 769 913 278 557 QUALITY Surface water quality monitored at all operations Yes Yes Yes Yes Yes Surface water quality deterioration off-site Yes Yes Yes Yes Yes Adverse surface water impact on humans No No No No No Groundwater quality monitored at all operations Yes Yes Yes Yes Yes Groundwater quality deterioration Yes Yes Yes Yes Yes Adverse groundwater impact on humans No No No No No
** Annual calculated tonnage of SO2 from Amplats processes only available for reporting by 31 March 2019 as per NAEIS (DEA reporting) system. NM = not measured. 2018 2017 2016 2015 2014
WASTE – kilotonnes Mineral waste accumulated in: Tailings dams (active and inactive)* 400,059 467,072 439,118 841,963 830,176 Rock dumps 1,488,359 1,184,522 1,115,410 1,053,785 972,125 Slag dumps 6,340 5,820 5,218 4,728 4,257 Non-mineral waste generated Hazardous to landfill 5.60LA 9.22 15.51 9.01 9.85 Hazardous incinerated 0.09 0 0 0.02 0.01 Non-hazardous to landfill 2.30LA 3.58 5.82 9.76 8.27 Non-hazardous incinerated – – – – – ENVIRONMENTAL INCIDENTS AND COMPLAINTS Level 1 209 381 603 453 525 Level 2 12 10 28 18 37 Level 3 0RA 0 0 0 0 Level 4 and 5 0RA 0 0 0 0 Formal complaints 8 9 23 2 9 Substandard acts and conditions 1,536 1,480 1,786 2,135 1,957 PRODUCTS – ounces Total refined PGMs and gold 4,507,335 4,621,211 4,641,604 4,766,736 3,626,867 RA Reasonable assurance provided by PwC. Refer to page 106 of supplementary report for the independent assurance report. LA Limited assurance provided by PwC. Refer to page 106 of supplementary report for the independent assurance report.
Anglo American Platinum Limited Integrated Report 2018 85 PILLAR OF VALUE: PRODUCTION
ORE RESERVES AND MINERAL RESOURCES REVIEW
CONSISTENTLYTHE COMBINED GENERATINGSOUTH AFRICAN AND ACCEPTABLEZIMBABWEAN ORE RETURNSRESERVES FOR HAVE OUR STAKEHOLDERSDECREASED BY 8.7% FROM 166.2 4E MOZ Mogalakwena Platreef Ore Reserves decreased by 8.5 4E Moz
COPY TO BE At Tumela Mine SUPPLIED 0.6 4E Moz increase in Ore Reserves At Unki Mine 0.5 4E Moz increase in Ore Reserves
GENERAL STATEMENT The Anglo American Platinum Limited (Amplats) method of reporting Ore Reserves and Mineral Resources is in accordance to the South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (the SAMREC Code). The reporting of Mineral Resources and Ore Reserves for 2018 is aligned to changes prescribed in the SAMREC Code published in 2016. The estimates (tonnes and content) quoted in the report are on an attributable interest basis and the attributable interest is noted in the tabulations. The Anglo American plc Ore Reserves and Mineral Resources Report quotes the reported estimates on a 100% basis. Ore Reserve and Mineral Resource estimates are quoted as at 31 December 2018.
86 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
ORE RESERVES Siyanda Resources Proprietary Limited and production. The reduction The combined South African and Zimbabwean Ore Reserves have of Ore Reserves has been partially offset by an increase in Ore Reserves decreased by 8.7% from 166.2 4E Moz to 151.6 4E Moz in the review at Tumela, Unki and Modikwa Mines due to conversion of Mineral period. The reduction was primarily due to economic assumptions at Resources to Ore Reserves. Mogalakwena Mine, the disposal of the interest in Union Mine to
Anglo Platinum Merensky, UG2, Platreef and Main Sulphide Zone (MSZ) Ore Reserves (4E Moz) – South Africa and Zimbabwe Changes between 2016 and 2018 (Amplats attributable) 3.7 (5.8) 172.0 170.2 (2.2) Disposals (1.2) 2.7 (1.2) 167.0 166.2 (1.9) (0.9) (5.1) 162.0 0.8 0.1 0.1 (6.7)
157.0 (0.9)
Reserves Moz 151.6 (5.6) 152.0
147.0 146.0
142.0 2016 2017 2018 2019 Platreef to Lonmin UG2, MSZ UG2, MSZ by Amplats Production Production Production Production Conversion assumptions assumptions refinement and Platreef: model of 42.5% interest Platreef (includes Platreef (includes Union: disposal of Pandora: disposal Bokoni: economic (excluding tailings) Platreef: economic (BRPM) disposal of of Doornbosch farm Bafokeng Rasimone 33% interest to RBP Mototolo: acquisition Modikwa: acquisition Merensky, UG2, MSZ Merensky, UG2, MSZ stockpile movements) stockpile movements) Conversion Merensky, Conversion Merensky, 85% interest to Siyanda reconciliation adjustment
At Mogalakwena Mine, pit shell optimisation and downgrading of IMPACT OF PORTFOLIO REPOSITIONING STRATEGY some lower grade material to Mineralisation as a result of economic Since 2013, Amplats has been executing a portfolio repositioning assumptions combined with model refinement and production strategy comprising three core elements: a restructuring of mineral movements, resulted in the Mogalakwena Platreef Ore Reserves assets into a value-optimised portfolio, deriving full value from decreasing by 8.5 4E Moz from 126.6 4E Moz in 2017 to 118.0 4E Moz operations, and enhancing cost and financial performance. in 2018 (–6.7 4E Moz due to economic assumptions, –0.5 4E Moz due The restructuring component has resulted in: to model refinement and -0.9 4E Moz due to production and stockpile •• The disposal of the Rustenburg mining and concentrating operations movements). The combination of basket metal prices and exchange to Sibanye-Stillwater rate used to optimise the Mogalakwena pit is based on long-term •• Twickenham Mine project placed on care and maintenance forecasts in a balanced supply/demand scenario. Mining costs are •• Operations ceasing at Bokoni Mine following a decision by Atlatsa escalated in real terms to account for anticipated mining inflation, to place it under care and maintenance increasing mining depth and haul distance. •• Interests in the Pandora Mine have been sold to Lonmin and the sale At Tumela Mine, 0.6 4E Moz were converted to Ore Reserves from the of a portion of Tumela Mine to Northam exclusive Mineral Resources. At Unki Mine, 0.5 4E Moz were added to •• Interests in the Union Mine have been sold to Siyanda at the end of the Ore Reserves due to planned mining area boundary changes. February 2018 For Modikwa Mine, the acquisition of additional ground obtained from •• Interests in the Mototolo Mine have been acquired from Glencore Samancor Chrome (Doornbosch) together with conversion from and minority shareholder(s) at the end of October 2018 Mineral Resource to Ore Reserves resulted in an additional 0.3 4E Moz. •• The 33% stake in Bafokeng Rasimone Platinum Mine Joint Venture has been sold to Royal Bafokeng Platinum (RB Plat) in MINERAL RESOURCES December 2018 and a section 11 application has been submitted to The combined South African and Zimbabwean Mineral Resources, the Department of Mineral Resources. The effective date of transfer inclusive of Ore Reserves, decreased by 5.1% from 801.1 4E Moz to of the mining right is expected in June 2019 following the approval 760.5 4E Moz in the review period. This was primarily the result of the process for government. As a consequence, Amplats will still report disposal of the interest in Union Mine to Siyanda (–39.2 4E Moz for the relevant attributable percentage (33%) Merensky and UG2 Reef and –0.6 4E Moz for the tailings dams). •• Ongoing engagements on interests in the Kroondal joint ventures.
Anglo American Platinum Limited Integrated Report 2018 87 PILLAR OF VALUE: PRODUCTION
ORE RESERVES AND MINERAL RESOURCES REVIEW CONTINUED
To date the net impact of this strategy is a reduction of Mineral During this period Amplats has maintained output of profitable metal Resource, inclusive of Ore Reserves of 39.9 4E Moz from 801.1 4E Moz to market and significantly improved its financial performance through to 760.5 4E Moz for the 2018 reporting period (39.2 4E Moz for the improved productivity, managing operating costs and reducing Union Merensky and UG2 reefs and 0.6 4E Moz for the Union tailings). overhead cost and net debt – all on the foundation of a value-optimising A further 22.5 4E Moz reduction following closure of the Bafokeng mineral asset portfolio. Rasimone Platinum Mine transaction in 2019 will occur.
Anglo Platinum Merensky, UG2, Platreef and Main Sulphide Zone (MSZ), inclusive Mineral Resources (4E Moz) – South Africa and Zimbabwe Changes between 2013 and 2018 (Amplats attributable)
950.0 Disposals 0.3 917.7 (1.3) (3.1) 913.6 (0.9) (2.4) 6.2 916.4 (1.7) (85.5)
895.0
840.0 (6.8) 9.3 831.7 (0.2) (12.0) (17.5) 1.0 (1.6) 801.1 (0.3) (39.2) Resources Moz 785.0 1.4 0.1 (2.5) (0.2) 760.5 (22.5) 737.9 730.0 2013 2014 2015 2016 2017 2018 2019 and depletion Platreef: mainly Driekop: disposal Portion of Tumela: Unki: methodology of Doornbosch farm Platreef: new model disposal to Northam Pandora: disposal of and new information New information and New information and New information and Modikwa: acquisition Unki: new information Unki: new information Unki: new information Unki: new information inclusion of Boikgantsho Mogalakwena: depletion Platreef: new information 42.5% interest to Lonmin Rustenburg mines: disposal depletion Merensky and UG2 Bafokeng Rasimone (BRPM) to Siyanda (excluding tailings) depletion: Merensky and UG2 depletion: Merensky and UG2 New information and depletion New information and depletion Union: disposal of 85% interest disposal of 33% interest to RBP Mototolo: acquisition by Amplats
DISPOSAL OF THE INTEREST OF UNION MINE TO DISPOSAL OF BAFOKENG RASIMONE MINE – 2019 SIYANDA RESOURCES PROPRIETARY LIMITED – Mineral Resources inclusive of Ore Reserves 2018 During December 2018 the 33% stake in Bafokeng Rasimone Mineral Resources inclusive of Ore Reserves Platinum Mine Joint Venture was sold to Royal Bafokeng Platinum and a As part of the portfolio repositioning strategy, interest in the Union section 11 application has been submitted to the Department of Mine were sold to Siyanda end of February 2018, resulting in: Mineral Resources. The effective date of transfer of the mining right is •• –14.7 4E Moz of Merensky Reef (85% attributable) expected in June 2019 following the approval process for government. •• –24.5 4E Moz of UG2 Reef (85% attributable) Finalisation of this transaction would decrease the combined South •• –0.6 4E Moz of tailings dams (85% attributable). African and Zimbabwean Mineral Resource inclusive of Ore Reserves ACQUISITION OF MOTOTOLO MINE FROM by 3.0% from 760.5 4E Moz to 737.9 4E Moz (–22.5 4E Moz) based on GLENCORE ALLOYS – PLATINUM DIVISION AND the 2018 declaration. OTHER MINORITY SHAREHOLDER(S) – 2018 •• –11.9 4E Moz Merensky Reef (33% attributable) Mineral Resources inclusive of Ore Reserves •• –10.7 4E Moz UG2 Reef (33% attributable). As part of the portfolio repositioning strategy, Amplats increased its Ore Reserves stake in the Mototolo Mine from 50% to 100%. The 40% transfer from Finalisation of the disposal of Amplats’ share of Ore Reserves at Glencore to Amplats was completed end of October 2018. The Bafokeng Rasimone Mine would decrease the combined South African remaining 10% from minority shareholder(s) has subsequently been and Zimbabwean Ore Reserves by 3.7% from 151.6 4E Moz to acquired, resulting in: 146.0 4E Moz (–5.6 4E Moz) based on the 2018 declaration (see •• +1.4 4E Moz of UG2 Reef (transfer from 50% to 100%). waterfall chart on page 87). •• –3.6 4E Moz Merensky Reef (33% attributable) •• –2.0 4E Moz UG2 Reef (33% attributable).
88 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
CHROMITE BY-PRODUCT FROM UG2 TAILINGS Resource and Reserve management database Under current market conditions, the recovery of saleable chromite •• Digital data capture of all relevant Mineral Resource and Ore Reserve concentrate from UG2 processing is economically viable. Recovery information from inter-stage or final UG2 flotation tail streams produces saleable •• Integration with the Anglo American plc’s group Resource and chromite product. The amount of chromite concentrate produced is Reserve reporting management systems directly linked to the UG2 Reef production and is recovered as a •• Internal database audit and approval. by-product during processing. Currently a chrome recovery plant is in EXTERNAL REVIEWS operation, with a community partner, at Amandelbult. Chromite External independent audits are executed to ensure that the company’s recoveries are between 12% and 16% from every tonne of UG2 ore standards and procedures are aligned with world best practice and processed (overall yield factor) when the Cr2O3 content in the UG2 include both process and numerical estimates audits. ore is greater than 20%. The contained monetary value of the chromite by-product is included when assessing UG2 Reef Ore To comply with the three-year external review and audit schedule, Reserves where the chromite recovery plants are in production. The Mineral Corporation was contracted to conduct the following: •• A detailed numerical audit in 2018 of the data gathering, data INTERNAL CONTROLS transformation and reporting of Mineral Resources and Ore Well established processes and protocols have ensured reliable Ore Reserves for Unki Mine. Reserves and Mineral Resources reporting. The Mineral Corporation audit comprised reviews of the Unki Mine In line with internal review and audit schedules and improvement processes and numerical audits. No technical fatal flaws or material initiatives, existing processes and reviews encompass: issues were identified in the detailed numbers audit of the Mineral Resource and Mineral Reserve estimates for Unki Mine. The Mineral Methodology Corporation states that the Mineral Resource estimates are supported •• Formal sign-off of the geological structure and geological discount by an extensive validated geological database and satisfy the SAMREC factors; borehole and sample databases; and the Mineral Resource Code requirements for reasonable prospects for eventual economic classification extraction; and the Mineral Reserve estimates are based on a detailed •• A Mineral Resource classification scorecard for consistent resource- Life of Mine Plan that has been tested for economic viability under a classification statements set of realistically assumed production levels, modifying factors and •• Various single and multiple disciplinary reviews in the framework economic inputs. of the business planning process •• Mine design and scheduling for consistent reserve reporting, which COMPETENCE AND RESPONSIBILITY takes into account the company’s business plan and economic tail In accordance with the JSE Listings Requirements, Amplats prepared management process its Mineral Resource and Ore Reserve statements for all its operations •• Further refinement of the Basic Resource Equation (BRE), an with reference to SAMREC Code guidelines and definitions (the internal reconciliation of Mineral Resources segregated into the SAMREC Code, 2016 Edition). Competent persons have been various business plans and investment centres appointed to work on and assume responsibility for the Mineral •• The annual sign-off of the Mineral Resources and Ore Reserves. Resource and Ore Reserve statements for all operations and projects, as required. Information communicated •• Mineral Resource and Ore Reserve waterfall charts indicating annual The lead Competent Person with overall responsibility for the movements compilation of the 2018 Mineral Resources and Mineral Reserves •• Prill and base-metal grade distribution of the Mineral Resources Report is the executive head: technical, Dr Gordon Smith (PrEng). inclusive of Ore Reserves He confirms that the information on Mineral Resources and Ore •• Spatial distribution of the Ore Reserve and Mineral Resource Reserves in this report complies with the SAMREC Code and that it classifications of the major mines may be published in the form and context in which it was intended. •• Reporting of Mineral Resources, inclusive of Ore Reserves •• Statement of Mineralisation.
Anglo American Platinum Limited Integrated Report 2018 89 PILLAR OF VALUE: PRODUCTION
ORE RESERVES AND MINERAL RESOURCES REVIEW CONTINUED
Dr Smith obtained the following qualifications from the University of the based on projections that may vary as new information becomes Witwatersrand: BSc (mining engineering), MSc in engineering, MBA available, specifically if assumptions, modifying factors and market and PhD. He has 40 years’ mineral industry experience across precious, conditions change materially. Since the parameters associated with base and ferrous metals, chrome, diamonds, semi-precious stone, and these considerations vary with time, the conversion of Resources to coal operations. In this period, he has held a range of technical, Reserves may also change over time. For example, mining costs managerial, and executive positions at Rio Tinto (Zimbabwe), Falcon (capital and operating), exchange rates and metal prices may have Mines plc, the Chamber of Mines – research organisation, CSIR – significant impacts on the conversion of Resources to Reserves and the mining technology, Snowden Mining Industry Consultants and Metora reallocation of Reserves back to Resources in cases where there is a Mineral Resources prior to joining Amplats in 2003. reversal in the economics of a project or area. The assumptions, modifying factors and market conditions therefore represent areas of He is registered with the Engineering Council of South Africa (ECSA) as potential risk. In addition, security of mineral right tenure or corporate a professional mining engineer, registration number 930124. ECSA is activity could have a material impact on the future mineral asset based on the 1st floor, Waterview Corner Building, 2 Ernest inventory. Oppenheimer Avenue, Bruma Lake Office Park, Bruma, Johannesburg, 2198, South Africa.
All Competent Persons at the operations have sufficient relevant experience in the type of deposit and in the activity for which they have taken responsibility. Details of Amplats’ Competent Persons are Gordon Smith PrEng, PhD, MBA, MSc (engineering), published on page 50 of the Ore Reserves and Mineral Resources BSc (mining engineering) report and available from the company secretary on written request. Engineering Council of South Africa (930124) Executive head: technical RISK Anglo American Platinum The geosciences and integrated planning departments follow risk 55 Marshall Street management processes in order to systematically reduce risks relevant Johannesburg, South Africa to the Mineral Resources and Ore Reserves estimation. Presently, no area of risk is considered significant using current controls. It is generally 14 February 2019 recognised that Mineral Resource and Ore Reserve estimations are
90 Anglo American Platinum Limited Integrated Report 2018 PERFORMANCE REVIEW
CHANGES IN THE ORE RESERVES AND MINERAL RESOURCES FOR 2018 Summary of Ore Reserve and Mineral Resource estimates The figures in the table below represent Amplats’ attributable interests: 2018 2017 Million Contained Million Contained tonnes metal tonnes metal Classification (Mt) 4E Moz (Mt) 4E Moz Ore Reserves1 – South Africa 1,409.7 146.1 1,652.9 160.9 Ore Reserves1 – Zimbabwe (Unki) 52.5 5.6 47.4 5.2 Ore Reserves1 – South Africa and Zimbabwe 1,462.2 151.6 1,700.3 166.2
Mineral Resources exclusive of Ore Reserves2, 4 – South Africa 4,784.2 564.7 4,989.1 595.4 Mineral Resources exclusive of Ore Reserves2, 4 – Zimbabwe (Unki) 169.7 23.2 176.5 23.8 Mineral Resources exclusive of Ore Reserves2 4,953.9 587.9 5,165.6 619.2 – South Africa and Zimbabwe
Mineral Resources inclusive of Ore Reserves2, 5 – South Africa 6,275.8 730.3 6,589.6 770.6 Mineral Resources inclusive of Ore Reserves2, 5 – Zimbabwe (Unki) 224.9 30.2 226.7 30.5 Mineral Resources inclusive of Ore Reserves2 6,500.7 760.5 6,816.3 801.1 – South Africa and Zimbabwe
Ore Reserves1 – South Africa tailings 0.7 0.0 Mineral Resources exclusive of Ore Reserves2, 4 – South Africa tailings 72.3 1.9 86.6 2.5 Mineral Resources inclusive of Ore Reserves2, 5 – South Africa tailings 72.3 1.9 87.3 2.5 Note: ‘Mineral Resources exclusive of Ore Reserves’ and ‘Scheduled Resources converted to Ore Reserves’ are not additive because of modifying factors being applied during the conversion from resources to reserves. The above Mineral Resources exclude Sheba’s Ridge project in South Africa. This project reflects a 3E grade which is the sum of platinum, palladium and gold grades, whereas the other mines and projects reflect a 4E grade. For this project, see the tabulation below:
2018 2017 Million Contained Million Contained tonnes metal tonnes metal Classification (Mt) 3E Moz (Mt) 3E Moz Mineral Resources inclusive of Ore Reserves2 211.9 6.4 – South Africa (Sheba’s Ridge project)3 1 The Ore Reserves reflect the total of Proved and Probable Ore Reserves. 2 The Mineral Resources reflect the total of Measured, Indicated and Inferred Mineral Resources. The Mineral Resources are quoted after geological losses. 3 Uncertainty surrounding Mineral Rights, paired with a review of the reasonable prospects for eventual economic extraction criteria, led to a downgrade of Mineral Resources to Mineralisation. 4 Exclusive Resources: Mineral Resources exclusive of the portion converted to Ore Reserves. 5 Inclusive Resources: Mineral Resources inclusive of the portion converted to Ore Reserves.
Anglo American Platinum Limited Integrated Report 2018 91 PILLAR OF VALUE: PEOPLE
OUR BOARD
Independent non-executive chairman Non-executive director VALLI MOOSA (61) MARK CUTIFANI (59) BSc (mathematics) BEng (mining) Board member of the World Wildlife Fund (South Africa). He previously served as Mark has worked across six continents, 25 countries and over 20 commodities. chairman of Eskom, director of the Bombay Stock Exchange-listed Indian Hotels He has been chief executive of Anglo American since 2013, and serves on the Company Limited, president of the International Union for the Conservation group management committee. Previously chief operating officer for Inco and of Nature, chairman of the UN commission on sustainable development and Vale’s global nickel business, and senior executive with leading multinational minister of constitutional development in President Mandela’s cabinet. mining groups. With a leadership style focused on people development, External directorships: Imperial Holdings Limited, Sanlam Limited, accountability and delivering sustainable value, Mark has emphasised developing Sun International Limited, Sappi Limited strong investor, labour, industrial, government and community relationships. External directorships: Anglo American plc, Anglo American South Africa Appointed chairman in April 2013 (chair), De Beers Societé Anonyme (chair) Appointed a director in April 2013
Chief executive officer CHRIS GRIFFITH (54) Independent non-executive director BEng (mining) (hons), PrEng NOMBULELO MOHOLI (57) Member of the Anglo American plc group management committee and BSc (engineering) director of Anglo American South Africa Limited. Prior to his current Nombulelo has spent most of her career in the telecommunications sector. appointment, he was CEO of Kumba Iron Ore from July 2008 and has been She was chief executive officer of Telkom SA SOC Limited from 2011 to 2013 with Anglo American for 27 years. He joined Amplats in 1990, progressing after heading senior portfolios in that company for 14 years. She also served in rapidly from supervisor to one of the youngest general managers in the strategy, marketing and corporate affairs roles at Nedbank. company, overseeing Amandelbult and Bafokeng Rasimone Platinum mines, before heading the joint venture operations. External directorships: Old Mutual Life Holdings SA, Woolworths Holdings Limited, Eyethu Community Trust (chair), Old Mutual Emerging Markets and Appointed CEO in September 2012 Old Mutual Group Holdings Appointed a director in July 2013
Finance director Independent non-executive director IAN BOTHA (47) PETER MAGEZA (64) BCom, CA(SA) FCCA (UK) Previously group financial controller of Anglo American plc and chief financial Chartered certified accountant and fellow of the Association of Chartered officer of Anglo American’s coal division and its ferrous metals and industrial Certified Accountants (ACCA) UK. Until 2009, he was executive director and division. Ian resigned in September 2018 and left Amplats after FY18 results group chief operations officer of Absa Group Limited and served that group in were finalised. various capacities over his nine-year tenure. Appointed finance director in May 2015 External directorships: Remgro Limited, Sappi Limited, MTN Group Limited Resigned in February 2019 Appointed a director in July 2013
* Craig Miller was appointed to the board as the new finance director with effect from 1 April 2019.
92 Anglo American Platinum Limited Integrated Report 2018 Audit and risk committee (ARC) Governance committee (GC) Nomination committee (NC) Remuneration committee (RC) Safety and sustainable development committee (S&SD) Social, ethics and transformation committee (SET) GOVERNANCE
Non-executive director Independent non-executive director NORMAN MBAZIMA (60) RICHARD DUNNE (70) BCom, CA(SA) CA(SA) Norman has served as deputy chairman of Anglo American South Africa since Richard was with Deloitte for 42 years until retiring in 2006 as chief June 2015. From 2012 to 2016, he was CEO of Kumba Iron Ore. Norman joined operating officer. Anglo American in 2001 at Konkola Copper Mines plc and was subsequently External directorships: Standard Bank Group Limited appointed global chief financial officer of Anglo American Coal. He became finance director of Amplats in 2006 and later stepped in as joint acting CEO. Appointed a director in July 2006 Norman was CEO of Scaw Metals from 2008 and CEO of Thermal Coal from 2009 to 2012. Norman joins Amplats again as non-executive director. External directorships: Anglo American South Africa Limited Appointed a director in October 2018
Non-executive director STEPHEN PEARCE (55) BA Business (accounting) Stephen is the finance director of Anglo American plc. He has more than 16 years of public company director experience and 30 years’ experience in the mining, oil and gas and utilities industries. Stephen has a Bachelor of Business Independent non-executive director from Royal Melbourne Institute of Technology and a Graduate Diploma in JOHN VICE (66) Company Secretarial Practice. He is the fellow of the Institute of Chartered Accountants and a member of the Governance Institute of Australia and the BCom, CA(SA) Australian Institute of Directors. Before retiring in 2013, John was a senior partner in KPMG where his roles External directorships: Anglo American plc, De Beers plc, Kumba lron Ore included head of audit, serving on the South African and African boards and Limited executive committees, and chairman of KPMG’s international IT audit. Appointed non-executive director in January 2018 External directorships: Standard Bank Group and Standard Bank of South Africa Appointed a director in November 2012
Non-executive director TONY O’NEILL (60) Independent non-executive director BEng, MBA DAISY NAIDOO (46) Group director technical at Anglo American plc and a recognised global business and technical expert in the mining industry. Spearheaded strategy BCom, CA(SA), Masters in Accounting (taxation) development and significant turnarounds in large, complex and geographically Professional background in structured finance and debt capital markets. Daisy diverse mining businesses. Tony’s career spans some 35 years, predominantly developed her career at Sanlam after a brief tenure in financial planning and in the gold mining sector, with senior roles at Newcrest Mining, Western Mining corporate taxation at SA Breweries and Deloitte & Touche respectively. Corporation and AngloGold Ashanti. External directorships: STRATE Holdings Limited, Barclays Africa Group External directorships: Anglo American plc, Anglo American South Africa, Limited, Mr Price Group Limited, Hudaco Industries Limited. De Beers Societé Anonyme Trustee: Discovery Health Medical Scheme Appointed a director in October 2013 Appointed a director in July 2013
* Andile Sangqu resigned as a director in October 2018.
Anglo American Platinum Limited Integrated Report 2018 93 PILLAR OF VALUE: PEOPLE
OUR EXECUTIVE COMMITTEE
Chief executive officer Finance director CHRIS GRIFFITH (54) IAN BOTHA (47) BEng (mining) (hons), PrEng BCom, CA(SA) Member of the Anglo American plc group management committee and Previously group financial controller of Anglo American plc and chief financial director of Anglo American South Africa Limited. Prior to his current officer of Anglo American’s coal division and its ferrous metals and industrial appointment, he was CEO of Kumba Iron Ore from July 2008 and has been division. Ian resigned in September 2018 and left Amplats after FY18 results with Anglo American for 27 years. He joined Amplats in 1990, progressing were finalised. rapidly from supervisor to one of the youngest general managers in the company, overseeing Amandelbult and Bafokeng Rasimone Platinum mines, Appointed finance director in May 2015 before heading the joint venture operations. Appointed CEO in September 2012
Finance director Executive head: mining operations CRAIG MILLER (45) DEAN PELSER (51) BCompt (hons), CA(SA) BSc Eng (mining) (hons) Craig joins Amplats from Anglo American plc where he has served for 19 years. Previously he served as Anglo American’s group financial controller since Prior to his current appointment, Dean was executive head: safety, health June 2015; prior to this, he held various financial roles including chief financial and environment for over four years, and a director of Rustenburg Platinum officer of Anglo American Iron Ore Brazil and chief financial officer of Anglo Mines since 1999. He has an extensive background in the gold, coal and PGM Thermal Coal. mining industries spanning 30 years. Prior roles include general manager at Mogalakwena Mine, divisional director: Eastern Limb operations (mining, Appointed finance director in April 2019 concentrating, smelting and JVs), general programme manager: Eastern Limb development and head of infrastructure and sustainable development. In addition to his operational experience in management, strategic planning and large-scale project delivery, he also served as chairman of Lebalelo Water User Association, Joint Water Forum and a decade on the board of Lepelle Northern Water. Appointed in December 2015
Executive head: technical and SHE GORDON SMITH (60) BSc Eng (mining), MSc Eng, MBA, PhD, PrEng Executive head: corporate affairs Gordon has 39 years’ minerals industry experience across precious metal, base metal, ferrous metals, chrome, diamond and semi-precious stone, and SEARA MACHELI-MKHABELA (47) coal operations. He joined Amplats in 2003 as general manager: planning. BA (law), LLB, MBA Subsequent appointments included head of strategic business planning, head of mineral resource management and executive head: technical. Gordon is A lawyer by profession, with a specific interest and training in protection of an honorary life fellow and past president of the Southern African Institute of intellectual property, Seara has 20 years’ experience at executive corporate Mining and Metallurgy, a fellow of the Mine Ventilation Society of South Africa, level which includes working for multinational companies. Her primary focus is and a member of the South African National Institute of Rock Engineering on increasing community benefit from mining while minimising and managing and associate professor at University of the Witwatersrand, school of mining associated risks. She drives the company’s social strategy, premised on the engineering. principle of partnerships with stakeholders. Appointed in September 2013 Appointed in July 2014
94 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
Executive head: human resources Executive head of projects LORATO MOGAKI (49) PRAKASHIM MOODLIAR (51) BA (law), master’s dip (human resources management), MBA BSc (Chemical Engineering) Lorato joined Amplats in 2005 as group manager: people development and was Executive Development Programme later appointed head of human resources development and transformation. Prior Prakashim is a project management professional with more than 25 years’ to that, she was a training and development general manager in the post and experience in defense, power generation and the fast-moving consumer goods telecommunications sector. She is a board member of the Mining Qualifications manufacturing sectors. Most recently, he worked at ABInBev Africa as the Authority (MQA), the regulating body for all mining-related qualifications. She also Africa Zone projects manager, responsible for leading a large, multi-disciplinary serves on the Zenzele board, which champions community development projects team which focused on project development and execution in Africa, with on behalf of Amplats. a USD650 million portfolio. Prior to that he worked for companies such as Appointed in June 2013 SABMiller, Eskom and Armscor, where he strategically led and successfully delivered large-scale projects, both locally and internationally. Appointed in March 2019
Executive head: processing GARY HUMPHRIES (55) PrEng, BSc Eng (chem), BCom, MBA Gary joined Amplats in 2001 as manager: concentrator optimisation. He has held numerous technical and operational roles in the company, most recently head: process control and concentrator technology. Prior to joining Amplats, he was a senior consultant at SRI Consulting (Zurich), and worked at Fleming Martin Securities and AECI. Appointed in January 2017
Company secretary ELIZNA VILJOEN (43) BCom, FCIS With over 20 years’ experience in the company secretarial field in consulting and in-house positions, Elizna has been exposed to various corporate transactions across the industrial, mining, information technology and telecommunications sectors. She joined Anglo Operations Proprietary Limited in May 2013 where she is responsible for running the company secretarial teams at Amplats and Anglo American South Africa, serving their boards and board committees, and ensuring appropriate compliance with JSE Listings Requirements, the Companies Act and governance best practice. Appointed in May 2013
Indresen Pillay resigned in August 2018. Vishnu Pillay retired in December 2018. Anglo American Platinum Limited Integrated Report 2018 95 CORPORATE GOVERNANCE
Sound corporate governance is a critical foundation for protecting stakeholder value and achieving the group’s strategic growth objectives. Our governance universe (below) illustrates how the pillars of value are governed via the four governance segments – board, finance, risk, and social and sustainable – in support of the Amplats strategy and purpose. The elements in each segment are governed with appropriate processes, systems and resources to ensure we demonstrate the desired governance outcomes.
BOARD GOVERNANCE The board is ultimately accountable for the governance universe and provides independent monitoring, guidance and oversight of the segments. PILLARS OF VALUE GOVERNANCE UNIVERSE GOVERNANCE OUTCOMES
BOARD GOVERNANCE • Board structure • Board organisational • Memorandum of culture and ethics Incorporation and • Compliance with key FINANCIAL charters legislation • Board evaluation • Remuneration and • Succession planning reward and rotation • Key performance • Key policies indicators Ethical SAFETY AND HEALTH leadership SOCIAL AND FINANCIAL SUSTAINABLE GOVERNANCE ENVIRONMENT GOVERNANCE • Planning and Good Purpose, budget performance • Sustainability • Operational strategy performance SOCIO-POLITICAL • Social way and strategy and • Internal controls performance • Capital allocation • Safety and health values • Monitoring and • Environment evaluation • Stakeholder Effective • Funding structure control PEOPLE engagement and • IT governance communication • Taxation • Transformation • Outlook • Human resource development PRODUCTION Trust and legitimacy RISK GOVERNANCE • Risk management COST • Operational risk assurance • Internal audit
Governance elements of the business model and value-creation process
Amplats has adopted the principles and recommended practices in the King Report on Governance for South Africa 2016 (King IV). The board reviews its governance practices annually and is satisfied that all aspects of King IV were applied in 2018. Our King IV application register is available on our website.
96 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
KEY GOVERNANCE ISSUES In 2018, the board discussed several key issues in detail: 1 2 3
Corporate transactions – SO2 abatement project – Strategic priorities – received updates on corporate approved implementation of the SO2 agreed strategic priorities after the transactions aligned to the portfolio abatement facility at Polokwane metallurgical strategy workshop in March 2018 and repositioning. smelter complex totalling R1.5 billion to approved the revised Amplats purpose Refer to chairman's letter, chief executive ensure compliance with South African (refer below). officer review and financial review emission standards by mid-2020. Refer to page 99 of the supplementary report
4 5 6 Mining charter – Strategic board renewal – Bench Marks Foundation – reviewed a gap assessment of the outcome of strategic board renewal considered and addressed the concerns company’s compliance with the mining process (refer to page 101) raised in its critical analysis of Amplats’ charter 2018. sustainability reporting Refer to pages 75 and 76 of the Refer to page 6 of the supplementary
supplementary report report
LEADERSHIP STRUCTURE The board comprises two executive directors and 10 non-executive directors (half of whom are independent non-executive directors). The roles of the chief executive officer and chairman are separate, and governed by the board charter. The company supports the principles of gender and race diversity at board level. At present, female representation is 17% while HDP representation is 42%. Race and gender diversity targets are aligned to the new mining charter (MC18). As announced on 23 October, Mr Andile Sangqu, executive head of Anglo American South Africa Limited stepped down as non-executive director and Mr Norman Mbazima was appointed as a non-executive director. Mr Ian Botha, the finance director has tendered his resignation and will therefore step down from the board on 28 February 2019. Mr Craig Miller, who is currently the Anglo American plc financial controller, will assume the role of finance director on 1 April 2019. The chairman, Mr Valli Moosa, who has served as a director for the past 10 years, will retire from the board at the AGM to be held on 17 April 2019. Mr Norman Mbazima will assume the role as chairman going forward. Mr Peter Mageza, who has been a member of the board for the past five years, has been appointed as the lead independent director.
Composition of the board
Gender diversity Demographic diversity Geographical diversity
17% 15% 25% ■ Female ■ White ■ South Africa ■ Male ■ Black ■ Australia 23% 62% ■ Indian 75%
83%
Tenure Non-executive/executive Independence
17% 17% 20% ■ 0 – 3 ■ 4 – 9 ■ Non-executive ■ Independent 50% 50% ■ 10 + 2 ■ Executive ■ Non-independent
66% 80%
Anglo American Platinum Limited Integrated Report 2018 97 CORPORATE GOVERNANCE CONTINUED
BOARD GOVERNANCE STRUCTURE The board is supported by the following committees:
SOCIAL, ETHICS AND TRANSFORMATION AUDIT AND RISK (SET) COMMITTEE COMMITTEE Monitors social, ethics and transformation activities Oversees effective governance of group’s financial in the group and reports to shareholders on results, internal audit, external audit, risk and developments and progress IT governance.
SAFETY AND SUSTAINABLE DEVELOPMENT REMUNERATION (S&SD) COMMITTEE COMMITTEE Monitors safety and health of the company’s BOARD Monitors group’s remuneration practices and employees’ and the impact of its operations on the structures aligned to best corporate environment from a SHE perspective. governance practices.
GOVERNANCE NOMINATION COMMITTEE COMMITTEE Monitors and reports on corporate governance Makes recommendations on the appointment in the group and ensures that best governance and reappointment to the boards, composition practices are applied. and succession planning.
Each committee has terms of reference delegating specific responsibilities and authority on behalf of the board. The chairmen of these committees report on their activities at each quarterly board meeting. The respective terms of reference as well as the board charter were reviewed and updated in October 2018. The committees are inter-related and provide feedback to each other on salient matters as they apply to the remit of the committee. The S&SD committee monitors the company’s endeavours to conduct its operations in a responsible manner and achieves a sustainable balance between economic, social and environmental development in regard to the safety and health of employees and impact of its operations on the environment from a SHE perspective and by referral to the SET committee, the communities surrounding company operations. The S&SD provides a report to the SET committee and the audit and risk committee after each meeting on salient matters discussed as they relate to social, ethics, transformation and risk.
Attendance at meetings Board meeting Board strategy session Risk workshop Valli Moosa (chairman) 5/5 1/1 1/1 Chris Griffith (chief executive officer) 5/5 1/1 1/1 Ian Botha (outgoing finance director) 5/5 1/1 1/1 Mark Cutifani 5/5 1/1 1/1 Richard Dunne 4/5 1/1 1/1 Peter Mageza 5/5 1/1 1/1 Norman Mbazima 1/1 n/a n/a Nombulelo Moholi 5/5 1/1 1/1 Daisy Naidoo 5/5 1/1 1/1 Tony O’Neill 4/5 1/1 1/1 Andile Sangqu 4/4 1/1 1/1 John Vice 5/5 1/1 1/1
Please see the committee reports for attendance at those meetings.
98 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
BOARD ORGANISATIONAL CULTURE AND ETHICS The board subscribes to the ethical standards detailed in the Amplats code of conduct and business integrity policy and believes that “the tone is set from the top”. It seeks to lead by example in engaging with all stakeholders, in its deliberations and decisions, and by monitoring the ethical culture and compliance in the group. Through the SET committee, the board oversees the organisational culture transformation journey that focuses on embedding a new culture at Amplats, one which places significance over success and is shaped as a ‘journey’ towards an organisation that will be known as an employer of choice fostering high-performance teams and individuals. For more on our organisational culture transformation journey, refer to page 52 in the supplementary report. The chairman promotes a culture of cohesive support by providing ethical and effective leadership to the board, without limiting the principle of collective responsibility for its decisions. All board members are fully involved and informed of any business issue on which a decision must be taken, and constructively challenge management when appropriate. The board, through the SET committee, monitors the ethics programme. The business integrity programme manages bribery and corruption risks and the code of conduct sets guidance on standards of behaviour expected of employees. The integrity committee, chaired by the finance director and attended by relevant executives, monitors implementation of the ethics programmes. The governance manager reports on matters pertaining to the ethics programmes, to the executive and SET, committees. BOARD EVALUATION An external effectiveness review involving the full board was undertaken. This full review process, with external assistance included software provision, analysis and report-writing provided by an independent international provider: •• The aim was to review the overall performance of the board, identify strengths and improvement needs for future board work through an online questionnaire •• Review strengths and weaknesses of the board, with identified areas for improvement. The areas of evaluation are shown below:
1 CORE BOARD EFFECTIVENESS
5 REMUNERATION COMMITTEE 4 CORE GOVERNANCE EVALUATION 5 S&SD COMMITTEE EVALUATION
5 CORPORATE GOVERNANCE 3 BOARD DYNAMICS COMMITTEE EVALUATION 5 SET COMMITTEE EVALUATION
4 BOARD AGILITY: ASSISTING 5 NOMINATION COMMITTEE MANAGEMENT TO ANTICIPATE AND EVALUATION SHAPE THE FUTURE, AND LEAD TRANSFORMATION
5 AUDIT COMMITTEE EVALUATION
The results were presented in report format at a subsequent board meeting: •• Overall effectiveness of the board and its committees •• Strengths and development areas of the board •• Identified areas for improvement. The board drafted a blueprint for implementing recommendations, allowing it and its committees to further improve their overall effectiveness.
Anglo American Platinum Limited Integrated Report 2018 99 CORPORATE GOVERNANCE CONTINUED
Areas of focus for the future include: Richard Dunne has served as a director for over nine years since his •• CEO, CFO and senior executive succession first appointment and will retire at the next AGM. After assessing his •• Board succession independence (below), he has offered himself for re-election. •• Further improving discussions on longer-term strategy. Assessment of independence DIRECTOR APPOINTMENT AND ROTATION The nomination committee assesses the independence of directors The board follows a formal and transparent process in appointing annually and considers the independence criteria proposed by new directors. Any appointments are considered by the full board, King IV. on the recommendations of the nomination committee. This For Richard Dunne, the committee made special consideration and committee evaluates the skills, knowledge and experience required concluded that he was independent as he had no interest, position, to implement group strategy, which are assessed against defined association or relationship with the company or management competencies in the skills matrix to address any gaps, together with which, when judged from the perspective of a reasonable and race and gender diversity targets. informed third party, is likely to influence unduly or cause bias in In terms of the company’s memorandum of incorporation (MoI), decision-making. A number of factors influenced this decision, a third of directors retire by rotation each year and are eligible for particularly board, management and structural company changes re-election by shareholders at the annual general meeting (AGM). during his tenure. In addition, any director who has served for more than nine years is obliged to retire at each AGM, as per the MoI, and offer themselves for re-election. The nomination committee has reviewed the directors up for re-election. The assessment considers: •• Independence •• Tenure •• Knowledge, skills and experience •• Performance.
100 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
GOVERNANCE IN ACTION Strategic board renewal Following its evaluation process in April 2018, the board prioritised succession and initiated a strategic board-renewal process. Often the drivers for board renewal relate to imminent departures, rather than a long-term view of the composition requirements of the board. The strategic board-renewal process included building a blueprint of the future, using strategic indicators and the current composition profile. The steps followed in building the blueprint can be summarised as: •• Developing a picture of the company in five years based on successful strategic implementation •• Obtaining input from board members on the renewal process and imperatives through an online questionnaire •• Considering the strategy and strategic outcomes to describe the ideal board for the company in future which included size, skills set, committee structures, leadership profiles and diversity balance •• Determining the skills set and competencies of the current board through competence-based interviews with each director, detailed individual CVs, peer review and self-indication from each director, and then •• Together with the chairman, build a competence matrix for the board with all critical skills and the ideal board coverage for the future company. The blueprint of current and future critical competencies will be used to map incumbent competencies and develop a board-renewal plan over the next five years. Amplats has evolved from a pure mining player to a more diverse company with impact and demands from other areas, such as industrial processes, markets, products and applications. This requires a broader scope of attention and technical competence by the board, as well as a growing range of softer skills that are becoming increasingly important at board level, namely innovation, problem- solving, strategic thinking and relationship building. These leadership skills, combined with the message from board members, indicated that future board appointments should focus more on profiles with these leadership skills, and strong technical skills in mining and mining technology, industrial processes and sales and marketing/market development. The current versus ideal skills representation on the board is shown below for both leadership and technical skills. The ideal representation is the board’s view of the ideal percentage of each identified skill that should be represented on the board. The strategic renewal programme is therefore focused on achieving the ideal representation.
Leadership skills: Current representation on Technical skills: Current representation on the board versus ideal the board versus ideal
8 8
6 6
4 4
2 2
0 0 Strategic thinking Problem- Building and Openness of People Learning Strategic Mining, Industrial Global Financial and Senior Domestic Sales and and analysis solving leveraging communication development agility planning mining sector perspective commercial corporate affairs marketing in relationships technology experience experience leadership mining/mining experience product context ■ Ideal ■ Current representation ■ Ideal ■ Current representation ■ Current representation ■ Ideal
Anglo American Platinum Limited Integrated Report 2018 101 CORPORATE GOVERNANCE CONTINUED
STRATEGY AND RISK Risk management The strategic process A board risk workshop is held annually. At this session, the risk The tough economic environment in which the company has process, company’s top risks against external views on risks facing operated over recent years has demanded much attention of both the business, risk appetite and tolerance status for top risks are the board and management, at the cost of longer-term strategy. considered. For a summary of the top 10 risks, refer to page 25. On operational aspects, the focus of the board has become The audit and risk committee oversees the risk management oversight of balancing the portfolio, ensuring optimal capital process and regularly reviews significant risks and mitigating allocation, dealing with the complexities of the portfolio, and the strategies, and reports to the board on material changes in the roll-out of new technologies. group’s risk profile each quarter. On social, ethics and sustainability, the focus of the board has become zero tolerance in terms of safety, managing the COMPLIANCE WITH KEY LEGISLATION development and introduction of MC18, societal impact and The board, through the governance committee, receives regular transformation. updates on the status of compliance with key legislation. The strategic debate has shifted from primarily cost optimisation In terms of the compliance programme, 1,500 pieces of legislation and applying savings to safeguarding Amplats against future have been assessed and 593 deemed applicable to the group. disruption. This is being achieved by executing the three strategic Business-critical legislation has been prioritised based on the priorities agreed at the annual two-day strategic workshop: impact on the company’s licence to operate. During the year, •• Developing the market for PGMs to increase demand and ensure 18 pieces of business-critical legislation were assessed, and no long-term sustainability of the business significant issues of non-compliance identified. •• Extracting the full potential from operations through our people The compliance programme will assess further pieces of legislation and innovation in the coming year as prioritised. In 2019, we will continue to build •• Investing in our core portfolio to deliver industry-leading cash on the programme to identify gaps in regulatory compliance and flow and returns, and growing the demand we create. implement action plans, monitor safety, health and environment Regular feedback on progress in implementing these strategic compliance activities, consider compliance to regulations such as priorities is provided through the CEO report at quarterly board the JSE Listings Requirements and consider any new legislation meetings and a focused feedback session at an appropriate impacting the company. board meeting. A compliance plan is compiled annually and presented to the The board will continue the structured approach to balancing executive committee for consideration and the governance long-term strategy while taking care of short-term performance committee each February for approval. through restructuring discussions to focus on the future, while Regular progress reports will be provided to the executive taking care of accountabilities. committee in 2019, with a full compliance report presented to the governance committee in October 2019.
GOVERNANCE IN ACTION Mining charter (MC18) On 27 September 2018, the minister published in the Government Gazette the final version of the mining charter for implementation. A detailed gap assessment was conducted and then considered by the board. This measured the company’s current position against MC18 targets, using a binary scoring system. The assessment indicated that Amplats is currently compliant with a score of 54%, equivalent to the Department of Trade and Industry (dti) code’s level 5. Refer to detailed disclosure on page 76 of the supplementary report.
Mining charter elements Weighting as per MC18 Current score Ownership Y/N (ringfenced element) Y Mine community development Y/N (ringfenced element) Y Housing and living conditions Y/N (ringfenced element) Y Employment equity 30% 16% Procurement supplier and enterprise development 40% 15% Human resources development 30% 23% Total 100% 54%
The board also considered the impact of procurement targets on Amplats and recognised the risk of non-compliance in 2023 on achieving 70% of locally procured goods and manufactured mining goods with a 60% local content within five years. It noted that compliance would require extensive effort and additional cost. (Reference to integrated supply chain strategy in the supplementary report.)
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REMUNERATION AND REWARD Conflicts of interest Through its remuneration committee, the board ensures group Each quarter, the company obtains details from directors on strategy translates to measurable key performance areas and external shareholdings and directorships that may create conflicts targets are clearly articulated. See remuneration report for further of interest while serving as directors on our board. The declarations detail. Refer to page 118. are closely scrutinised by the chairman and company secretary, and tabled at each quarterly board meeting. Where a conflict arises, KEY PERFORMANCE INDICATORS directors must recuse themselves from discussions. As far as Key performance indicators are derived from strategic objectives possible, the company requires that directors avoid potential annually. The remuneration committee considers and approves conflicts of interest. short and long-term incentives and key performance contracts and performance outcomes for the chief executive officer, finance Share dealings director and prescribed officers. See remuneration report as well as The company has a policy regulating dealings in its shares by group performance, strategy – how we reward success. directors and relevant employees. No group director or employee may deal, directly or indirectly, in the company’s shares based on KEY POLICIES unpublished, price-sensitive information and in closed periods. Delegation of authority These include the periods between the company’s interim and Amplats has a detailed authority manual, which is reviewed financial year ends and the dates on which those results are annually. The objective is to delegate transactional and contractual published, and any time when the company is trading under a authority from the board to designated staff members at various cautionary announcement. Directors and employees classified as levels. This provides effective and practical directives and guidelines insiders are also prohibited from trading during the closed period for minimising or eliminating the company’s possible exposure to of the holding company. risk. It also ensures staff members fully understand demarcated Race and gender diversity policy authorisation limits and strictly adhere to these. The governance The company commitment to race and gender diversity is outlined committee provides oversight to this document and recommends in this policy. Female representation on the board is currently 17% its approval to the board annually. while HDP representation is 42%. The gender diversity target is Code of conduct and business integrity policy aligned to MC18. Amplats has adopted the group-wide Anglo American plc code of conduct and business integrity policy. The code of conduct covers COMPANY SECRETARY 23 areas such as bribery, competition, compliance, money The board is supported by the company secretary, Elizna Viljoen. laundering, alcohol and drug abuse, and data privacy. The board conducted its annual review of her performance as per paragraph 3.84(h) of the JSE Listings Requirements. Incidents of alleged fraud and corruption are reported through various channels, monitored continually and reported to the In its assessment, the board considered the recommended SET committee. In 2018, 36 cases of alleged fraud, corruption practices of King IV and satisfied itself that Elizna is competent, and dishonesty were investigated, involving 15 employees and qualified and has the necessary expertise and experience to fulfil 14 contractors. To date, 18 cases have been finalised, resulting in the role. four dismissals and the services of seven contractors terminated.
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AUDIT AND RISK COMMITTEE REPORT
FINANCIAL AND RISK GOVERNANCE SUPPORTING STRATEGIC PRIORITIES
BOARD GOVERNANCE We are pleased to present the audit and risk committee report for the year ended 31 December 2018. The committee continues to ensure the integrity and transparency of corporate reporting, that external audit SOCIAL AND Strategy, remains independent and it evaluates the robustness of SUSTAINABLE purpose and FINANCIAL internal controls and risk management processes. GOVERNANCE GOVERNANCE values
COMPOSITION AND GOVERNANCE The committee is governed by terms of reference reviewed annually by the board. It executes its duties and responsibilities in line with these terms of reference for the group’s accounting, RISK GOVERNANCE financial reporting practices and finance function, external audit, internal audit and internal control, integrated reporting, risk management and IT (information and technology) governance.
This is a statutory committee, duly constituted under section 94 of the Companies Act 71 2008, as amended. Its members satisfy the requirements to serve and have the adequate knowledge and experience to carry out their duties. Membership and attendance are set out below: Members
Committee member since Board status Meeting attendance RMW Dunne (chairman) 1 July 2006 Independent non-executive director 5/5 PN Mageza 1 July 2013 Independent non-executive director 5/5 D Naidoo 1 July 2013 Independent non-executive director 5/5 J Vice 30 November 2012 Independent non-executive director 5/5
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There were no membership changes in the review period. KEY AUDIT MATTERS The committee notes key audit matters set out in the report of the The chairman of the board, chief executive, finance director, independent auditors (pages 4 to 5 of the annual financial company secretary, head: risk and assurance, financial controller statements), namely: and external auditors attend by invitation to provide a coordinated •• Physical quantities of inventory as related to sampling (excluding approach to all assurance activities. The internal and external ore stockpiles) and measurement of inventory auditors have unrestricted access to the committee, and they meet •• Mototolo Mine acquisition accounting. with committee members without management being present. The performance of the committee is reviewed annually as part The committee has deliberated on these and is comfortable they of the board and committee evaluation process. are correctly represented.
Adding value in 2018 2019 and beyond Annual financial •• Ensured appropriate financial reporting procedures are established and •• Ongoing focus on continuous statements (AFS) operating improvement of group’s and integrated •• Reviewed and discussed the AFS and related disclosures, considered the financial systems, processes reporting process accounting treatment, significant or unusual transactions, and accounting and controls estimates and judgements, confirmed AFS had been prepared on a going •• Monitoring regulatory concern basis and recommended AFS to the board for approval reporting requirements and •• Considered the impact of IFRS 16 Leases implementation ensuring compliance •• Considered the integrated report and assessed its consistency with operational, therewith financial and other information known to committee members, and for consistency with the AFS. The committee is satisfied that the integrated report is materially accurate, complete and reliable and consistent with the AFS •• At its meeting on 14 February 2019, recommended the integrated report for the year ended 31 December 2018 for approval by the board External audit •• Nominated Deloitte & Touche and G Berry as the external auditor and •• Finalise tender process designated auditor respectively to shareholders for appointment as auditor for initiated in 2018 to appoint the financial year ended 31 December 2018, and ensured the appointment a new audit firm for financial complied with all applicable legal and regulatory requirements. Prior to making year 2020 its nomination, the committee considered all information in terms of the JSE Listings Requirements in assessing the auditor and designated auditor’s suitability for reappointment •• Considered requirements arising from mandatory audit firm rotation and initiated a process to rotate Deloitte & Touche off as external auditor in 2020 and appoint a new audit firm and designated auditor •• Considered the auditor’s annual plan and scope of work, monitored the effectiveness of external auditor for audit quality, expertise and independence •• Considered key audit matters noted in the integrated report •• Determined the nature and extent of all non-audit services provided by the external auditor and pre-approved these •• Received necessary representations from the auditor confirming its independence Internal audit and •• Ensured that internal audit performed an independent assurance function. •• Embed the use and reporting control Monitored the effectiveness of the internal audit function in terms of its of data analytic techniques assurance scope, plan execution, independence, and overall performance •• Standardise internal quality of the function and its head assurance processes over •• Assessed the group’s systems of internal control including financial controls, internal audit work business risk management and maintaining effective internal control systems •• Finalise a technology review •• Monitored audit findings, risk areas and, where appropriate, challenged to ensure systems used are management on actions taken industry best practice •• Based on the above, concluded there were no material breakdowns in internal control, including financial controls and business risk management and maintaining effective material control systems
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AUDIT AND RISK COMMITTEE REPORT CONTINUED
Adding value in 2018 2019 and beyond IT governance •• Reviewed IT risks and control environment •• Review the internal control •• Received management reports on results of disaster recovery tests and environment for information security management management •• Considered the impact of cyber-crime and reviewed information security capability in the organisation •• Reviewed reports on the effectiveness of IT risk management as part of group risk management Risk management •• Reviewed group policies on risk assessment and risk management for financial •• Enhance risk reporting to reporting and the going concern assessment, and found them appropriate include links between strategy •• Held a board workshop to review and consider significant risks facing and risk management the company •• Greater alignment of •• Received a written assessment of the effectiveness of the company’s system of integrated risk management internal controls and risk management from the business assurance services process across the group department of Anglo Operations Proprietary Limited Sustainability •• Considered PwC assurance scope and schedule of key material issues for the •• Review audit scope for 2018 integrated report that was approved by the S&SD committee material issues •• Received necessary assurances through this process that material disclosures are reliable and do not conflict with financial information Legal •• Reviewed, with management, legal matters that could have a material financial •• Monitor developments from impact on the group changes in legislation •• Assessed compliance with all other statutory duties under section 94(7) of the Companies Act, King IV and JSE Listings Requirements •• Received and considered the report of the JSE Limited, dated 20 February 2018 on proactive monitoring of the financial statements Combined •• Reviewed the combined assurance framework that categorises each provider •• Continue alignment assurance of assurance into different lines of defence in the organisation: management, of internal and external internal and external assurance providers assurance providers to •• Reviewed the level of assurance provided by combined assurance framework ensure the combined and concluded this was appropriate for identified business risks and exposures assurance framework is •• Reviewed plans and work outputs of external and internal auditors and concluded efficient and effective these were adequate to address all significant financial risks facing the business
FINANCE DIRECTOR AND FINANCE FUNCTION The committee has reviewed an internal assessment of the skills, expertise and experience of Ian Botha, the finance director, and is satisfied he has the appropriate expertise and experience to meet his responsibilities. The evaluation also considered the appropriateness of the expertise, continuous improvement and adequacy of resources of the finance function. Ian Botha has tendered his resignation effective 28 February 2019. Mr Craig Miller who is currently the Anglo American plc financial controller, will assume the role of finance director on 1 April 2019. Based on the processes and assurances obtained, we believe the company and group’s accounting practices are effective.
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GOVERNANCE IN ACTION Mandatory firm rotation In June 2017, the Independent Regulatory Board for Auditors (IRBA) of South Africa published the rule on mandatory audit firm rotation for auditors of all public interest entities. The provisions are effective for financial years from 1 April 2023. As Amplats’ auditor since October 1997, Deloitte would therefore be due for rotation. As the current Anglo American plc audit partner is due for rotation at the end of 2019, we decided to coincide our audit firm rotation with that of our holding company given the efficiencies to be gained from a single group audit firm. Deloitte & Touche will be rotated off as auditor at the end of 2019. An extensive tender process is being conducted, with the following leading processes already under way with the prospective auditors: •• Site visits •• Submission of significant accounting judgements, policies and procedures, and team structure to auditors •• Presentations and engagement with prospective firms •• Request for proposal approved by audit and risk committee. The audit and risk committee will consider and approve the appointment of an external auditor once the tender process is completed.
CONCLUSION The audit and risk committee is satisfied that it has considered and discharged its responsibilities in line with its terms of reference during the review period. On behalf of the committee
Richard Dunne Chairman Johannesburg 14 February 2019
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SOCIAL, ETHICS AND TRANSFORMATION COMMITTEE REPORT
MAINTAINING GOOD CORPORATE CITIZENSHIP, COMMUNITY DEVELOPMENT AND ENGAGEMENT
BOARD GOVERNANCE
We are pleased to present the social, ethics and transformation (SET) committee report for the year ended SOCIAL AND Strategy, 31 December 2018. The committee is constituted in terms of SUSTAINABLE purpose and FINANCIAL GOVERNANCE the requirements of section 72(8) of the Companies Act 71 GOVERNANCE values 2008 (the Act), and its associated regulations. The committee continues to assist the board in discharging its duties and makes recommendations to the board on social and economic development, good corporate citizenship, environment, health and public safety, applicable consumer relationships, and RISK GOVERNANCE labour and employment issues. It also draws relevant matters to the attention of the board and reports to shareholders at the annual general meeting.
COMPOSITION AND GOVERNANCE The composition of the committee is in line with regulation 43(4) of the Act and comprises a mix of independent non-executive and executive directors. These include the executive head: human resources (HR), corporate Affairs and adviser to the CEO of Anglo American plc. Members in 2018 were: Nombulelo Moholi (chairman), Richard Dunne, Dorian Emmett, Andile Sangqu, Lorato Mogaki, Seara Mkhabela and Valli Moosa. There were no changes to the committee during 2018.
Invitees include the chief executive, legal counsel and company secretary as well as departmental heads of sustainable development, social performance, risk assurance, HR development and transformation. Attendance is as set out alongside.
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Members
Committee member since Board status Meeting attendance NT Moholi (chairman) 25 October 2013 Independent non-executive director 4/4 RMW Dunne 23 April 2012 Independent non-executive director 4/4 DTG Emmett 23 April 2012 Independent committee member 4/4 S Mkhabela 20 July 2017 Executive director 3/4 L Mogaki 24 April 2013 Executive director 4/4 MV Moosa 23 April 2012 Independent non-executive director 3/4 AH Sangqu 27 October 2015 Independent non-executive director 3/4
OUR PURPOSE The committee monitored the company’s activities and practices, having regard to relevant legislation and prevailing codes of best practice, on social and ethical matters and that Amplats displays good corporate citizenship.
Adding value in 2018 Adding value in 2019 •• The committee received regular reports from the safety and sustainable •• Continue to monitor the impact of initiatives focused on development (S&SD) committee for assurance on progress against the safety of employees and their health, as well as the board-approved objectives environment •• Reviewed progress reports on project Alchemy (establishing a broad- •• Promote accelerated project execution and impact to based system for economic community empowerment and ownership) benefit communities •• Assured the board on the integrity of the company’s supplementary •• Oversee sustainability disclosures report and sustainability sections of the integrated report. Provided recommendations on material issues the board should consider in maintaining the integrity of this report •• Reviewed the community strategy, key performance indicators and •• Annually review and agree community strategy against objectives, and agreed the annual community investment budget key indicators •• Reviewed all community investment, strategic sponsorships, donations •• Continue to monitor the impact of these contributions in and charitable contributions host communities •• Monitored infringements of the company’s corruption and business •• Ensure corporate ethics programme is enforced integrity policy to ensure robust controls remained in force •• Reviewed the company’s ethics policies and processes, and considered •• Monitor good governance and business integrity their effectiveness •• Monitored the company’s activities in terms of labour and employment. •• Monitor that the workforce is adequately equipped and Monitored the correct balance in transformation activities to ensure skilled to drive business objectives adequate skills and maintain stability in the company •• Attended the combined S&SD site visits •• Continue to visit various operations
Anglo American Platinum Limited Integrated Report 2018 109 PILLARS OF VALUE: SOCIO-POLITICAL, PEOPLE
SOCIAL, ETHICS AND TRANSFORMATION COMMITTEE REPORT CONTINUED
GOVERNANCE IN ACTION For Nkululeko financial wellness programme: The For organisational culture transformation programme we initiated in 2015 has been very successful in Building on good progress in 2017 to embed organisational reducing employee indebtedness (refer to pages 4 and 46 of the cultural transformation through the focus areas of leadership, supplementary report). While it continues to assist employees engagement and values, Amplats has continued with an array with debt-relief solutions, its focus has shifted towards of activities to enable the desired behaviour shift, using a empowering our workforce to take ownership of their broader simultaneous top-down and bottom-up approach. financial wellness. For enabling safe behaviour in the workplace For mining charter Over time, Amplats’ safety record has improved across various Amplats is committed to creating and maintaining an indicators. Noting that the trajectory of improvement was environment that provides equal opportunities to all its flattening in 2017, we reviewed the safety approach, looking employees, particularly historically disadvantaged groups. beyond compliance to include the safety culture. This approach The broad-based socio-economic empowerment charter for integrated the outcome of the 2018 CEO safety summit and the mining and minerals industry (mining charter 2018) was various initiatives from, among others, human resources into gazetted and became effective on 27 September 2018. In a safety culture model. addition to its applicability (mining rights, licences and permits), To understand the Amplats safety culture, information from the charter introduces new definitions and terms, and aims to various assessments and surveys around safety was analysed. align with the BBBEE Act and dti codes. Based on the feedback from all surveys, Making safety personal After gazetting the new charter, the Department of Mineral was identified as the compelling message to drive personal Resources consulted with stakeholders to develop associated accountability and a sense of belonging. In line with this guidelines for implementation. These were published late in message, various initiatives were identified and implementation December 2018. has started focused on improving the culture of safety. For project Alchemy For modernisation and mechanisation All the Alchemy trusts and the non-profit company (NPC) With the introduction of new mining technologies in Amplats, new continued to have intensive, robust, grassroots stakeholder and different skill sets are required by our people. We need people engagements via diverse development forums over the last who are both technical experts and machine operators, with 18 months. Engagement and communication strategies include in-depth technical knowledge of machinery and the cognitive and extensive consultations around the trusts/NPC’s individual visio-spatial abilities to manage underground equipment safely strategies, strategic partnerships and mandates, as well as local and effectively via a remote-control unit in a very confined development priorities, projects, community trustee selections underground space. and annual general meetings. This is an ongoing, meticulous, Accordingly, it has become critical that the future of work and the sensitive and critical process in building trust and synergy employee of the future be looked at holistically, but also with the between communities and the Alchemy structures as Amplats lens. development facilitators. In response, Amplats has developed a strategy to build a digital The trusts and the NPC have revised and embedded their talent and learning capability. This will assist in rapidly converting strategies into executing their mandates toward the Alchemy large groups of current employees from conventional to vision of Sustainable and thriving communities, through and modernised equipment and then reusing some of the digital beyond mining. Additional development levers have been platforms and technology investment to enable further identified and embedded into the daily execution of the trusts/ technology transitions in mechanisation and automation. NPC, including strategic social investment, resource mobilisation, lobbying and advocacy. This aligns well with For talent and development strategic partners and frameworks, and collaboration is under Amplats has an integrated approach to developing talent and way at programme and project levels, including the Anglo building a strong leadership pipeline that aims to equip the American sustainability strategy (specifically the thriving workforce and leaders with adequate skills and capabilities to communities pillar of education, health and livelihood), UN drive business objectives. Sustainable Development Goals, national development plan, The strength of the leadership pipeline is assessed through government line ministries and local government’s integrated several key factors: development plans as far as possible. •• Diversity (historically disadvantaged and female A tangible, positive and ‘lived-experience’ impact in communities representation) is imperative and, in 2019, the trusts and NPC will embed social •• Bench strength (number of senior managers and middle return on investment/innovation as both a decision-influencing managers identified as talent) and assessment tool to enhance the ‘impact focus’ across their •• Capability (number of senior managers and middle managers activities. capable in their roles). Cross-referencing table To ensure the company has suitably qualified and diversified As some of the committee’s responsibilities and deliberations talent, support is provided through various talent and leadership overlap with other committees, detailed policy and performance development programmes. information appear in other sections of the integrated and supplementary reports.
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SET committee priorities Page reference Integrated report (IR) Activities monitored by the committee Supplementary report (SR) Social and economic Performance against UN Global Compact principles and development OECD anti-corruption: •• Human rights SR (our stakeholders) page 74 •• Labour SR (safety and health of employees and communities) page 23 •• Environment IR (S&SD report) page 114 •• Anti-corruption SR (our stakeholders) page 74 Employment equity performance SR pages 45, 76 Broad-based black economic empowerment SR page 78 Good corporate citizenship Business integrity policy IR pages 99, 103 and community Community development policy, strategy and performance IR page 74 Environment, health and Safety policy, strategy and performance SR pages 25 to 28 safety Health policy, strategy and performance IR (S&SD report) pages 115 to 117 Environmental policy, strategy and performance SR page – 83, and IR (S&SD report) pages 115 to 117 Stakeholder management Addressing stakeholder expectations and maximising SR (our stakeholders) pages 74 to community benefit 80, IR pages 10 to 15 Labour and employment Employment and labour practices policy and performance SR (our people) page 40
CONCLUSION The committee is satisfied it has discharged its responsibilities for the financial year in line with its terms of reference, King IV and the Act. On behalf of the committee
Nombulelo Moholi Chairman Johannesburg 14 February 2019
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NOMINATION COMMITTEE REPORT
ENSURING THE BOARD’S EVOLVING COMPOSITION
BOARD GOVERNANCE
The committee is pleased to present its report for the year SOCIAL AND Strategy, ended 31 December 2018. Its key focus areas during the year SUSTAINABLE purpose and FINANCIAL GOVERNANCE included external evaluation of board, committee and GOVERNANCE values individual director performance and strategic board renewal – ensuring the board’s evolving composition is best suited to guide the strategic imperatives of the company.
RISK GOVERNANCE
COMPOSITION AND GOVERNANCE Members
Committee member since Board status Meeting attendance MV Moosa (chairman) 26 April 2013 Independent non-executive director 3/3 M Cutifani 26 April 2013 Non-executive director 3/3 RMW Dunne 1 July 2006 Independent non-executive director 3/3
The committee executes its duties and responsibilities in line with terms of reference reviewed annually by the board, and summarised below: •• Evaluating the structure, size and composition (including skills, knowledge, experience, race and diversity) of the board •• Considering succession planning for directors and senior executives, taking into account challenges and opportunities facing the company, and the skills and expertise needed on the board in future •• Identifying and nominating candidates for the approval of the board to fill board vacancies as they arise •• Recommendations to the board on the continued service or retirement of any director who has reached the age of 70 •• Considering the performance of directors and taking steps to remove those who do not make an appropriate contribution.
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The committee has executed its duties and responsibilities during the year as follows:
Adding value in 2018 2019 and beyond Retirement by •• Considered directors proposed to retire at the annual general meeting and •• Review and consider eligibility rotation concluded on their eligibility for re-election in terms of their independence, for re-election of directors performance and contribution to the company and board. retiring by rotation in terms of independence, performance and strategic board renewal priorities Board structure, •• Initiated a process to identify a black female representative for appointment to •• Nominate to the board the size and the board to enhance its gender and race representation appointment of an identified composition •• Considered candidates for appointment to the board with specific industry successor to Ian Botha, the experience, particularly technical and mechanised mining experience outgoing finance director •• Considered board committee structure and representation on the respective •• Compile a board profile fit for committees. No changes were deemed necessary the future to ensure critical •• Initiated a process to identify a suitable successor to the finance director who skills are retained and resigned identified future skills are •• Assessed the suitability of the company secretary in line with JSE Listings recruited as appropriate Requirements. •• Consider the board committee structure and composition in line with the future board profile to support the company’s strategic priorities •• Assess the suitability of the company secretary Performance •• Conducted an external evaluation of board and committee effectiveness, •• Review board performance review performance of individual directors and how results affect the functioning of the as well as individual directors' board structure. performance towards the end of 2019 Succession •• Review and consider the talent management process in the company for a view •• Continue strategic board of the talent pipeline for future leaders renewal work to ensure the •• Conducted a strategic board renewal process that included an independent board comprises the review of the composition of the board of Amplats, as well as requirements for appropriate balance of composition, skills and competency evolution into the future given the strategic knowledge, skills, imperatives of the company. experience, diversity and independence to meet the company’s strategic objectives, including its governance role and responsibilities, objectively and effectively
CONCLUSION The nomination committee is satisfied it has considered and discharged its responsibilities in line with its terms of reference in the review period. On behalf of the committee
Valli Moosa Chairman Johannesburg 14 February 2019
Anglo American Platinum Limited Integrated Report 2018 113 PILLARS OF VALUE: SAFETY AND HEALTH, PEOPLE, ENVIRONMENT
SAFETY AND SUSTAINABLE DEVELOPMENT COMMITTEE REPORT
DRIVING A CULTURE OF ZERO HARM
BOARDBOARD GOVERNANCEGOVERNANCE
On behalf of the safety and sustainable development (S&SD) SOCIAL AND Strategy, FINANCIAL committee, I am pleased to present its report for the year SUSTAINABLE purpose and GOVERNANCE GOVERNANCE ended 31 December 2018. The committee’s key objective is values to ensure that Amplats operates responsibly and drives leadership in the areas of safety, health and environmental stewardship. In addition, responsibility for overseeing social, ethics and transformation activities in the group lies with this committee. RISK GOVERNANCE
COMPOSITION AND GOVERNANCE The committee comprises four independent non-executive directors, the chief executive and executive head: safety, health and environment (SHE) and projects and, more recently, the executive head: technical and SHE. The executive head: SHE and projects resigned in the second half of 2018, with accountability for the these functions handed to the executive head: technical for the remainder of the year. I am honoured to chair the committee. I was previously global head of safety and sustainable development at Anglo American and am currently adviser to its chief executive. Collectively, committee members have the necessary expertise and knowledge to enable it to perform its functions effectively. The executive heads of joint ventures, corporate affairs, process, human resources and own mines attend committee meetings as permanent invitees. Other executive heads attend by invitation as required.
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The committee met four times during the year. Attendance at these meetings is shown below. Members
Committee member since Board status Meeting attendance DTG Emmett 21 July 2006 Chairman of the committee 4/4 RMW Dunne 4 May 2010 Independent non-executive director 4/4 CI Griffith 29 October 2012 Chief executive officer 4/4 MV Moosa 1 February 2011 Independent non-executive director 3/4 NT Moholi 30 October 2013 Independent non-executive director 4/4 J Vice 10 February 2017 Independent non-executive director 4/4 I Pillay 13 October 2016 Executive head 3/3 G Smith 1 October 2018 Executive head 1/1 * Attended by invitation.
OUR PURPOSE In fulfilling its mandate, the committee’s duties and responsibilities include to: •• Oversee, on behalf of the board, material management policies, processes and strategies designed to manage SHE-related risks and achieve compliance with SHE responsibilities and commitments •• Review, assess and monitor SHE performance and compliance with company standards and applicable legal and regulatory requirements •• Review the causes of any fatal and significant SHE-related incidents and receive assurance that learnings are shared across the group •• Commission SHE audits carried out in terms of legal and company requirements and to review the outcomes and management response •• Consider material regulatory and technical developments that may be relevant to the group’s SHE activities •• Draw material matters in the committee's mandate to the attention of the board as required •• Review the group’s external SHE reporting and regulatory disclosures, and findings of external auditors.
The committee reports quarterly to the social, ethics and transformation (SET) committee and audit and risk committee on salient matters in their terms of reference, and directly to the board. The committee has an annual work plan, developed against its terms of reference. It conducts two site visits annually to areas of strategic importance and/or key risk areas impacting the business. The performance of the committee is reviewed annually as part of the board and committee evaluation process.
COMMITTEE DISCUSSIONS IN 2018 We summarised salient matters reviewed and discussed at committee meetings in 2018: Safeguarding value for our stakeholders in 2018 Focus for 2019 and beyond Governance, •• Considered reports from management, and internal and external •• Maintain governance practices in line with regulatory auditors, on compliance with legal and regulatory requirements best practice and reporting •• Considered and approved the appointment of PwC as the assurance •• Monitor regulatory reporting requirements provider for 2017 to 2019 and ensure compliance •• Received necessary assurances from external auditors that selected data in the 2018 integrated report and supplementary (sustainability) report are reliable •• Reviewed outcomes of the materiality assessment process for 2018 integrated and sustainability reporting Strategic •• Reviewed SHE elements of the company's strategic and business •• Oversee implementation of the Amplats direction and plan, and validated proposed 2019 SHE objectives and targets at sustainability strategy business business and operational level objectives •• Ratified the Amplats sustainability strategy, developed in line with the Anglo American sustainability strategy •• Set the committee’s strategic goals for 2019 and agreed on its annual work plan
Anglo American Platinum Limited Integrated Report 2018 115 PILLARS OF VALUE: SAFETY AND HEALTH, PEOPLE, ENVIRONMENT
SAFETY AND SUSTAINABLE DEVELOPMENT COMMITTEE REPORT CONTINUED
Safeguarding value for our stakeholders in 2018 Focus for 2019 and beyond Management •• Reviewed the Anglo American SHE way management system plan for •• Oversee progress in ensuring that all systems and 2018 to 2020 operations are certified against processes •• Approved the development and roll out across Amplats of a mobile ISO 14001:2015 and ISO 45001 by 2020 application management tool to provide better visibility of business- •• Committee site visits scheduled in 2019: continuity management elements and requirements Amandelbult – Tumela Mine modernisation •• Monitored the steady progress in developing mobility applications and project/chrome plant and Polokwane distributing enabling devices to operations metallurgical complex •• Conducted site visits to Twickenham Mine – focusing on modernisation developments, Mareesburg tailings dam and Der Brochen project Risk •• Monitored progress with integrating SHE risk management into •• Monitor progress with expanding and management operational risk management (ORM) and the operating model refining risk-based management and •• Reviewed results from operational risk assurance (ORA) and control processes verification reviews, with focus on progress in addressing weaknesses •• ORM: monitor operations that are not identified in internal controls; approved the proposed ORA audit plan meeting targets across all KPIs for 2019 •• Coordinated the committee’s risk management work with the audit and risk committee, and SET committee SHE •• Received and discussed SHE performance reports (see performance •• Avoiding fatalities remains the key priority performance review on page 117) •• Continue to focus on building a culture of •• Examined in detail the causes of two fatalities at our operations in zero harm 2018 at the committee meeting following each occurrence •• Oversee Amplats’ commitment to •• Reviewed all serious SHE-related incidents and received assurance collaborative stakeholder efforts to make that learnings were shared our industry safer •• Safety focus initiatives reviewed included: •• Continue to assess opportunities to drive – Status of fatality close-out actions for 2017 and 2018 best and innovative practices in SHE – Progress report from industry expert Raphael Vermeir who is performance assisting Amplats with its safety maturity and operational culture – CEO Safety Summit, reinforcing leadership commitment to 2019 strategic priorities – Activities of the Anglo American elimination of fatalities taskforce and its priorities – Roll out of the Anglo American group-wide annual Global Safety Day campaign, which was built around the theme We are all safety leaders – Participation across all Amplats operations in the Minerals Council’s Industry Safety Day in August 2018 •• Health focus initiatives reviewed included the progressive implementation and impact of our real-time data analytics platform and management of critical controls aimed at reducing exposures to airborne hazards at our process operations •• Environmental focus areas included performance against water, energy and waste targets; insights on waste management; sulphur dioxide abatement initiatives at Polokwane and Mortimer smelters; buttressing to reinforce stability at the Helena tailings storage facility; and Amplats’ upstream mineral residue facilities’ vulnerability to static liquefaction failure Legal matters •• Remained informed about material legal matters, including the •• Monitor developments with material legal ongoing legal engagement process on emission standards applicable matters, providing guidance where to Mortimer and Polokwane smelters, and progress at Der Brochen on applicable relocating graves from the Mareesburg farm
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SHE PERFORMANCE REVIEW and managing patients with chronic conditions (particularly We provide an overview of key performance issues brought to the hypertension, HIV and diabetes), and strive to positively influence our attention of the committee, as well as the group’s SHE performance at employees’ wellbeing and lifestyles. Our medical surveillance the end of 2018. programme incorporates screening for common lifestyle health-risk Safety factors, non-communicable and communicable diseases. Tragically, two colleagues died at our operations in 2018. Any loss of life Over the last five years, we have achieved a step-change in managing is unacceptable and we are committed to eliminating fatalities, injuries TB and HIV in our workforce. In 2018, we concentrated on ensuring and any adverse effects on human health. improvements at Amandelbult, where HIV and TB prevalence is highest. We are encouraged by the significant decrease in the number and This included visible-felt leadership support; intensified well-planned severity of injuries at our operations and improved performance across wellness campaigns; innovative, incentivised voluntary testing and all safety elements and metrics. For example, our total recordable case counselling; and proactive follow-up on all employees who do not know frequency rate (TRCFR) improved by 34% year on year to 3.00 their status. We have made good progress towards meeting the (including Union Mine). Despite this progress, much still needs to be UNAIDS 90/90/90 targets for 2020: 90% of our permanent employees done and we are taking decisive steps to cultivate our desired safety should know their HIV status, 90% of identified seropositives should be culture. on antiretroviral therapy (ART), and 90% of those should have undetectable viral loads. At the end of 2018, 88% of our workforce We maintain a focus on strengthening leadership and accountability. knew their status. The uptake of ART by HIV-positive employees In driving our desired safety culture, we launched and rolled out our increased to 90%, of which more than 80% have undetectable viral updated life-saving golden rules to help us achieve our goal of zero loads. The annualised rate of TB incidence declined to 325 per 100,000 harm. and remains well below the South African national rate of 781 per Site-specific safety performance turnaround plans have been 100,000 (2015 Department of Health data). The uptake of TB successfully implemented at our more challenging operations, preventative therapy (isoniazid prophylaxis) in 2018 was 77%. Amandelbult and the smelters. Enhancing supervisory competencies Environment is a key focus in supporting safe production. Our environmental strategy aligns with the Anglo American Identifying and addressing high-potential hazards before they become sustainability strategy in articulating our commitment to demonstrate incidents has received greater focus and has continued to improve, with leadership in environmental stewardship. the timely stopping and remediation of unsafe work and conditions The implementation of best practice water-treatment/recovery becoming a priority. technologies continues to drive progress in improving our water Health use volumes and intensities. Amplats’ total water withdrawals or In managing health risks, in and beyond the workplace, we have abstractions decreased by 8%, potable water use decreased by 35%, maintained a strong performance. and our potable water-use intensity from external resources improved by 33%, compared to 2017. In 2018, we recorded four new cases of occupational disease: two cases of noise-induced hearing loss shift of over 10%, one case of We used 7% less energy in 2018 compared to 2017, resulting in an occupational dermatitis and one case of occupational asthma. Any 11% reduction in scope 1 and 2 greenhouse gas emissions of CO₂ illness caused by or associated with our work or working environment equivalents. must receive priority attention. Our vision is to achieve and sustain zero hazardous and general waste We have made significant progress over the last three years in to landfill by the end of 2020. Since 2016, we have achieved a steady mitigating the risk of exposure to excessive noise levels, primarily driven reduction in volumes of both hazardous and non-hazardous waste to by engineering solutions for haul-truck cabins and rock drills. This has landfill, recording a 38% year-on-year decrease in total waste in 2018. driven a steady decrease in the proportion of employees working in In 2018, we started constructing a sulphur dioxide (SO₂) abatement higher-risk categories. Unki and Mogalakwena mines continue to work plant at Polokwane smelter. By using innovative technology, we with original equipment manufacturers to implement muffling/silencing anticipate ultimately reducing SO₂ emissions by 96% to comply with strategies for equipment still exceeding the 107 decibel threshold. more stringent minimum emission limits from 2020 and achieve global Reducing levels of exposure to diesel particulate matter is a particular best practice. focus, and mitigation measures have been successfully implemented at We have not recorded any level 3 to 5 incidents since 2013, and achieved Twickenham and Unki. At our smelters, we are implementing plans to an encouraging decline in the number of level 1 and 2 incidents. address fugitive emission risks. Established employee wellness initiatives across our operations are More detailed information on Amplats’ SHE performance appears in the supported by related campaigns. We continue to focus on identifying 2018 supplementary report on page 22.
CONCLUSION The committee is satisfied it has discharged its responsibilities for the review period in line with its terms of reference. On behalf of the committee
Dorian Emmett Chairman Johannesburg 14 February 2019
Anglo American Platinum Limited Integrated Report 2018 117 PILLARS OF VALUE: PEOPLE, COST
REMUNERATION REPORT
ACTING RESPONSIBLY, FAIRLY AND TRANSPARENTLY
BOARD GOVERNANCE
SOCIAL AND Strategy, SUSTAINABLE purpose and FINANCIAL GOVERNANCE GOVERNANCE values
PART 1: BACKGROUND STATEMENT RISK GOVERNANCE Dear shareholders I am pleased to present the Anglo American Platinum Limited (Amplats) remuneration report for the year ended 31 December 2018. As a remuneration committee (Remco) we THE REMUNERATION COMMITTEE AND ITS ROLE are focused on ensuring that the reward our executive directors Purpose and prescribed officers receive reflects the performance of the company and remains proportionate to the overall employee base As tasked by the board, the committee assists in setting the and to the returns received by shareholders. We remain mindful of company’s remuneration policy and remuneration for directors the external focus on executive pay and the need to act responsibly, and prescribed officers. As per its terms of reference, published on fairly and transparently. our website, the committee’s responsibilities are to: •• Make recommendations to the board on the general policy for This report is divided into three parts: Part one: The background remuneration, benefits, conditions of service and staff retention statement (part one) which provides an introduction and a •• Annually review the remuneration packages of executive summary of our activities and performance. Part two: An overview directors and prescribed officers, including risk-based of our company-wide remuneration policy with an in-depth focus monitoring of incentives on the policy for executive management and its link to our strategy. •• Determine specific remuneration packages of executive Part three: How our policy was implemented during the year and directors and prescribed officers outcomes for our executive directors and prescribed officers. •• Approve and monitor operation of the company’s share incentive plans.
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The committee’s full terms of reference are aligned with the Companies Act and King IVTM and embrace best practice.
Remuneration committee composition Nombulelo Moholi (chairperson) Richard Dunne Valli Moosa Daisy Naidoo Profile on page 92 Profile on page 93 Profile on page 92 Profile on page 93 Independent non-executive Independent non-executive Independent non-executive Independent non-executive director director board chairman director Meetings and attendance Attended: 5/5 Attended: 5/5 Attended: 5/5 Attended: 5/5 Attendance by invitation: Chief executive officer (CEO), global head of reward from Anglo American plc, executive head: human resources, senior manager: remuneration and benefits, compliance officer of employee share schemes and representatives of PricewaterhouseCoopers (PwC).
Work plan and key remuneration decisions February •• Approve the remuneration report •• Review short-term incentive targets and payments for executive directors and prescribed officers •• Approve business-unit multiplier for short-term incentive payments to the balance of employees (excluding bargaining unit employees) •• Approve 2018 share incentive plan awards as well as performance conditions and vesting of 2015 share awards to executive directors and prescribed officers •• Review executive shareholding •• Review committee’s effectiveness (collective and individual) •• Approve the adoption of a share dilution policy April •• Approve new share-based incentive awards and performance criteria for executive directors and prescribed officers for the year ahead •• Share scheme compliance officer report: share plans •• Approve new minimum shareholding requirements •• Review extension on executive contract of employment July •• Review and approve any proposed changes to existing reward framework (remuneration policy, short-term incentives, long-term incentives) •• Review remuneration benchmarking, comparator grouping for executive directors and prescribed officers October •• Annual salary review for executive directors and prescribed officers •• Annual salary adjustments for all employees not in bargaining units •• Approve peer group for benchmarking executive remuneration and non-executive director fees •• Review annual remuneration report framework •• Review and approve share scheme rule amendments November •• Approve annual salary increase for CEO •• Approve annual salary increases for finance director and prescribed officers •• Approve annual salary increases for senior management and corporate employees •• Approve annual non-executive director fees
Governance controls and protocols No executive director or prescribed officer is involved in deciding their own remuneration. In 2018, the committee received advice from Anglo American plc’s human resource department and PwC South Africa, as independent advisers. The company’s auditors, Deloitte & Touché, have not provided advice to the committee. However, as in 2017 and at the request of the committee, they conducted certain verification procedures on calculating and disclosing the remuneration of directors and prescribed officers.
Anglo American Platinum Limited Integrated Report 2018 119 PILLARS OF VALUE: PEOPLE, COST
REMUNERATION REPORT CONTINUED
KEY CHANGES TO THE POLICY DURING 2018 The remuneration committee is pleased to report that further enhancements were made to the policy to ensure continued and improved alignment with shareholders and other stakeholders. Certain changes were also implemented to ensure alignment in the wider Anglo American group. Main changes included: •• The committee is cognisant of the fact that we should focus on creating value for both stakeholders and the community at large, rather than a narrow focus on financial success. Accordingly, granting performance awards under the long-term incentive plan (LTIP) will, in addition to financial measures, also be subject to safety and sustainability measures, with a 10% overall weighting •• Bonus share plan (BSP) and long term incentive plan (LTIP) share awards are capped on awarding to avoid the possibility of windfall gains from granting awards when the share price is low, in circumstances where a substantial share price increase follows •• All incentives will be subject to a malus condition. This implies unvested incentives (BSPs and LTIPs) can be reduced or cancelled on certain trigger events •• Our minimum shareholding requirements for executives were further refined and executives are expected to hold a percentage of their vested shares awards •• To ensure closer alignment with the wider Anglo American group, the total shareholder return (TSR) performance measure used in the LTIP was refined. The committee has aligned Amplats’ TSR performance conditions thresholds to those of its parent. OUR PERFORMANCE AND REMUNERATION IN CONTEXT The table below reflects the total spend on employee remuneration and benefits in 2018 and 2017 compared to headline earnings and dividends payable in those years. Distribution statement 2018 2017 Rm 7,588 3,886 Headline earnings % change 95 108 Rm 1,922 – Dividends paid in 20181 % change 100 – Rm 2,027 Dividends payable for the year (total)2 % Change 100 Rm 11,729 11,863 Payroll costs for all employees % change (1) (22) 24,789 28,692 Employee numbers % change (14) 2 Rm 330 295 Community engagement development spend % change 3 (12) Rm 1,771 1,742 Taxation paid % change 2 55 1 Dividends paid in 2018 included R928 million for 2H 2017 performance and R994 million for 1H 2018, which equated to a 30% pay-out ratio of headline earnings. 2 The board has declared a final cash dividend of R7.51 per share, equivalent to a 40% HEPS pay-out ratio. This dividend paid will be reflected in the 2019 financial year and will include qualifying employees from Amplats and Unki Mine. The company delivered strong performance in the 2018 financial year. As a result, bonus shares to the value of R198,115,833 were awarded and LTIP awards granted in 2016 vested at 94.45%. The key result area outcomes are summarised for the company, CEO and prescribed officers on page 22. WIDER WORKFORCE CONSIDERATIONS AND OUR APPROACH TO FAIRNESS The company continues the practice of fair, responsible and equitable remuneration. As such, the remuneration committee regularly reviews the company’s internal wage gap. In addition, lower increases are granted to executive management compared to other employees. The committee also seeks to find a balance between the interests of executives and shareholders to ensure fair and responsible outcomes. For this reason, a significant portion of the pay of our senior employees is at risk and subject to stretching performance conditions. IN CONCLUSION We trust this remuneration report provides an accurate overview of the company-wide remuneration policy and its implementation, and specifically an in-depth view on executive remuneration in the past year as the business is managed for a low-price environment in the protracted commodity downturn. The remuneration committee is satisfied that we have the right remuneration policy in place to support the implementation of our strategy and to allow us to bring sustainable growth to our shareholders within the parameters of corporate governance best practice. The shareholder voting outcomes in recent year of 99.2% suggest that you are supportive with our policy and our approach. I would like to take the opportunity to thank shareholders for their support and we look forward to continued dialogue going forward.
Nombulelo Moholi Chairperson 14 February 2019
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PART 2: REMUNERATION PHILOSOPHY AND POLICY Figure 2: 2019 forward – target (ZAR) REMUNERATION PHILOSOPHY Our remuneration philosophy aims to attract, retain and incentivise high-calibre individuals to develop and implement the CEO company’s business strategy, thus creating optimal long-term shareholder value. FD REMUNERATION POLICY TM Prescribed officers The remuneration policy subscribes to King IV recommendations (average) and is based on the following principles: •• Remuneration practices are aligned with the company strategy 0 8,000,000 16,000,000 24,000,000 32,000,000 •• Total rewards are set at competitive levels in the relevant market ■ Basic employment cost ■ Benefits ■ Bonus award ■ BSP bonus shares ■ LTIP
to ensure we attract, motivate and reward the right behaviour and Figure 3: 2019 forward – stretch (ZAR) performance, and retain highly talented individuals •• Total rewards are managed to align to the principle of responsible, equal and fair pay CEO •• Incentive-based rewards are linked to achieving demanding performance conditions, consistent with shareholder interests over the short, medium and long term FD •• Performance measures and targets for incentive plans are Prescribed officers structured to operate effectively throughout the business cycle (average) and support the business strategy •• Prudent application of long-term incentive schemes to minimise 0 9,000,000 18,000,000 27,000,000 36,000,000 45,000,000 shareholder exposure to unreasonable financial risk. ■ Basic employment cost ■ Benefits ■ Bonus award ■ BSP bonus shares ■ LTIP
REMUNERATION LINKED TO STRATEGY AND 2018 COMPARATOR REMUNERATION BENCHMARKING PERFORMANCE GROUP – DIRECTORS, PRESCRIBED OFFICERS AND We continually assess our remuneration strategy, practices and NON-EXECUTIVE DIRECTORS policies to ensure they remain aligned with and continue to support The committee’s key task is to preserve the relevance, integrity and the strategic objectives of the company and the environment in consistency of benchmarking. Benchmark data is used to provide which it operates. trend lines and compare practices only. EXECUTIVE DIRECTOR PACKAGE DESIGN AND TOTAL The committee is comfortable that the comparative group (below) REMUNERATION OPPORTUNITY AT DIFFERENT LEVELS is representative of our business model, product range and market OF PERFORMANCE capitalisation. The charts illustrate the pay mix of the CEO, finance director and AngloGold Ashanti Limited prescribed officers at below on-target performance (figure 1), on-target performance (figure 2) and stretch performance Sasol Limited (figure 3) applicable from 2019. Sibanye Gold Limited Impala Platinum Holdings Limited Figure 1: 2019 forward – below (ZAR) Northam Platinum Limited Exxaro Resources Limited CEO Gold Fields Limited Kumba Iron Ore limited FD South32 Limited Lonmin plc Prescribed officers (average) Note: Sasol Limited, which has a much higher market capitalisation, will be excluded from future benchmarks. 0 2,000,000 4,000,000 5,000,000 8,000,000 10,000,000
■ Basic employment cost ■ Benefits ■ Bonus award ■ BSP bonus shares ■ LTIP
Anglo American Platinum Limited Integrated Report 2018 121 PILLARS OF VALUE: PEOPLE, COST
REMUNERATION REPORT CONTINUED
ELEMENTS OF REMUNERATION Medical schemes offer numerous plans to provide affordable The key elements of total remuneration in 2018 are outlined below. healthcare and flexibility for a wide scope of employee income levels and membership profiles. GUARANTEED SALARY Non-union affiliated employees Retirement benefits are provided through defined-contribution Guaranteed salary is reviewed annually and positioned funds, with contribution levels aligned to market best practice and competitively against comparable peers by size, sector, business the rules of each fund. complexity and international scope. Company performance, Death benefits cater for the high-risk environment in which our affordability, individual performance and average industry and employees work. In the event of a fatality (or an injury-on-duty), the sector increases are considered in determining any annual benefits available to beneficiary families of employees who pass adjustment. Increases are generally inflation-linked and, where away in service include: affordable, additional budget is allocated for adjusting remuneration •• A lump sum payment from both the retirement fund and Rand levels that are not appropriately aligned to internal pay ranges and/ Mutual Assurance (COIDA) or market rates for a specific job. Adjustments are informed by •• A monthly pension as per COIDA for both spouse and positioning current salaries within a tolerance pay range and dependant children comparative ratio for a specific job or grade. Pay levels outside the •• A company cash provision to assist beneficiary families in the tolerance pay range are adjusted closer to the market 50th waiting period for benefit pay-out from the fund and COIDA percentile at which the company benchmarks pay. •• Company assistance to spouse and family on mine Union-affiliated employees •• Company transport to and from funeral. Guaranteed salary levels depend on the outcome of wage INCENTIVE REWARDS negotiations with representative unions. Amplats administers incentive schemes to encourage and reward BENEFITS achieving its strategic priorities over the short, medium and long Core benefits are offered as a condition of service, with some term. The short-term incentive focuses on achieving business elective flexible offerings for employees on a total package pay targets in that financial year, while the long-term incentive closely system. Core benefits primarily comprise retirement, risk and aligns the interests of executives with shareholders over the longer medical scheme participation. The company regularly reviews these term. It encourages executive directors and prescribed officers to benefits for affordability, flexibility and perceived value to build a shareholding in the company, which sustains ongoing employees. performance and creation of shareholder value.
Short-term incentive (STI) Participation: Executive directors, prescribed officers, management and corporate employees Consists of: Annual cash incentive linked to performance in the financial year, and payable in cash at the end of the performance period. Forfeitable bonus shares awarded under the bonus share plan (BSP) and based on a multiple of the annual cash incentive. The shares are restricted for three years, during which they may be forfeited if employment is terminated in breach of scheme rules. Participants may earn dividends on bonus shares in the restricted period. Forfeitable deferred cash payments based on a multiple of the annual cash incentive and applicable to middle management. Deferred cash payments are restricted for two years, during which they may be forfeited if employment is terminated in breach of scheme rules. Performance measures: Awards for the CEO and finance director are based on company performance and individual performance assessment (IPA), on an additive basis. Performance target weightings are shown on page 126. For the CEO, performance measures are weighted 70% for company performance and 30% for individual performance. For the finance director, the business and individual weighting is 55% and 45% respectively. The award for the remaining participants (excluding union-affiliated employees) is based on company and individual performance.
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Value of annual cash incentive: CEO: The maximum cash incentive is 100% of base salary Annual cash incentive = [(company performance score [70]) + (IPA score [30])] × maximum cash incentive (100%) x base salary Finance director: The maximum cash incentive is 80% of base salary Annual cash incentive = [(company performance score [55]) + (IPA score [45])] × maximum cash incentive (100%) x base salary Prescribed officers, management and corporate employees: A target bonus of 20 – 25% is used for senior management and 30% for prescribed officers. Incentive salary is set at 80% of total package for management and 100% of base salary for executives. A company performance multiplier is determined at the end of the year, based on the company’s performance against targets Annual cash incentive = (target bonus percentage × IPA modifier × company performance multiplier) x incentive salary Face value of bonus shares CEO: 150% of annual cash incentive and value of deferred cash: Finance director: 100% of annual cash incentive Prescribed officers and senior management: 140% of annual cash incentive Middle management (deferred cash): 70% of annual cash incentive Face value of bonus share award = average price of shares purchased x number of shares awarded. Proposed changes for 2019: Employees who separate from the company as ‘good leavers’ in the financial year will be eligible to receive BSP shares or a cash award in lieu of BSP shares for that financial year, pro-rated. This cash award will vest immediately. The definition of a 'good leaver' is an employee whose services are terminated for the following reasons: death, retirement, ill-health or retrenchment. To measure financial targets for the annual STI on the basis of 50% using actual foreign exchange rates and prices, and 50% using fixed (budgeted) foreign exchange rates and prices. Adopting this proposal will help smooth potential volatility and make annual STI pay-outs a fairer reflection of actual performance. Introduction of a safety modifier to the KRA (key result area) weightings to address fatalities. Company and individual limits: An aggregate limit applies – see details under the LTIP
Long-term incentive plan (LTIP) Participants: Executive directors, prescribed officers and senior management. Consists of: Executive directors and prescribed officers – conditional full-value shares that vest after three years, subject to meeting company performance conditions. Senior management – non-conditional shares that vest after three years. Maximum value of award CEO: 150% of base salary (face value): Finance director: 125% of base salary Prescribed officers: 100% of base salary Senior management: 15% of 80% of total package Performance measures: Awards are subject to four stretching performance conditions. The 2018 LTIP performance conditions were: •• TSR of 70% •• Return on capital employed (ROCE) reduced to 10% •• Cumulative attributable free cash flow at 10% •• Safety and sustainable development at 10% Performance period: Performance conditions are measured over a three-year period, commensurate with the financial years of the company.
Anglo American Platinum Limited Integrated Report 2018 123 PILLARS OF VALUE: PEOPLE, COST
REMUNERATION REPORT CONTINUED
Long-term incentive plan (LTIP) continued Changes in 2018: With approval by the board, Amplats has implemented the following changes to share incentives for executive directors and prescribed officers, effective from 2018 LTIP vesting in 2021: •• The introduction of malus provisions as a pre-vesting condition on unvested share awards. Malus typically refers to the reduction of unvested awards before the end of the vesting period (due to a negative trigger event). •• Capping the number of awards to a dilution percentage limit of 0.75% of issued share capital. This is meant to reduce the possibility of windfall gains from granting share awards when the share price is low, in circumstances where a substantial share price increase follows. •• The Amplats TSR model diverges considerably from that of Anglo American plc. The committee adopted the alignment of the Amplats TSR performance conditions thresholds to those of Anglo American plc. •• Introducing a minimum shareholding requirement (MSR) to further align the interests of executives to those of shareholders, for reasons of good governance and to maximise alignment between Amplats executives and Anglo American plc executives, effective from the 2019 financial year. Proposed changes for 2019: See proposed changes under STI section above which cover BSPs. Company and individual limits: Despite the fact that the aggregate limit for the BSP and LTIP is 269,681,886 shares, representing around 10% of the issued capital, the company does not issue new shares in settlement of the plans and purchases them in the market to avoid shareholder dilution. Currently, the number of awards outstanding is less than 1% and the directors have no intention of using the maximum number of shares. The total number of shares awarded in 2018 was 545,398, representing 0.2% of issued share capital.
SHARE-BASED AWARDS TO MANAGERS AND EXECUTIVES AGED 58 AND ABOVE The company’s LTIP and BSP rules do not permit allocations to managers and executives within two years of the retirement age of 60. To continue recognising the contribution of managers who have reached age 58, a cash award (in lieu of share awards) is provided. Cash payments under the LTIP are awarded annually, based on the fair value of the grant the executive would have been entitled to under the LTIP. For the BSP, cash payments are awarded annually based on the actual bonus earned by the individual. To avoid forfeiture, participants are required to remain in employment until normal retirement.
EMPLOYEE SHARE OWNERSHIP PLAN (ESOP) Purpose and background: We are proud to have embarked on an ownership journey with our employees in the form of ESOP. The company recognised the importance of allowing all employees to share in the success of the business. The previous share scheme, Kotula, ended in May 2015 and we were keen for employees to align their interests with those of shareholders in growing the company’s value. The scheme incentivises and empowers those employees who do not otherwise participate in the company’s share incentive plans to acquire shares in Amplats, subject to the provisions in the ESOP agreement and rules. Operation: The ESOP scheme was implemented on 1 August 2018. The mechanics of the scheme spans a five-year period, as depicted below The total quantum of the scheme is R25,000 per employee, payable as follows: •• R9,000 cash paid in 2018 •• R4,000 cash to be paid, R4,000 forfeitable shares to be allocated in 2019 •• R4,000 cash to be paid, R4,000 forfeitable shares to be allocated in 2020 Vesting occurs in years 4 and 5, ie 2021 and 2022.
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MINIMUM SHAREHOLDING TARGETS FOR EXECUTIVE Where an employee resigns from the company after the BSP and DIRECTORS AND PRESCRIBED OFFICERS LTIP performance periods have been completed, but before the Executive directors and prescribed officers are required to vesting date, Remco can in terms of the rules apply discretion to accumulate and hold a predetermined and market-aligned approve payment. minimum shareholding. The minimum shareholding requirement (MSR) must be accumulated from LTIP and BSP awards on an EXTERNAL APPOINTMENTS elective pre-tax basis, where executive directors and prescribed Executive directors are not permitted to hold external directorships officers will choose the quantum of shares to hold, prior to the or offices without the approval of the committee. If approval is vesting of any award. granted, directors may retain fees payable from one such appointment. The company policy on internal and external These individuals are required to accumulate and hold an directorships stipulates that: appropriate percentage of their share incentive awards to meet the •• The executive director may, as part of the non-executive target. The extent to which targets have been met is calculated by directorship, participate in one committee of that board multiplying the share closing price at financial year end by the •• Fees not retained by the executive director from both external number of shares held and expressing this as a percentage of and internal sources must be ceded to the company before annual base salary. accruing to the director.
SERVICE CONTRACTS OF EXECUTIVE DIRECTORS AND NON-EXECUTIVE DIRECTORS’ REMUNERATION PRESCRIBED OFFICERS Non-executive director appointments are made in terms of the All executive directors and prescribed officers have permanent company’s memorandum of incorporation and confirmed at the first employment contracts with Amplats or its subsidiaries. The annual general meeting (AGM) of shareholders after their contracts prescribe notice periods of 12 months for the CEO and appointment and then at three-year intervals. six months for the finance director and prescribed officers. Executive directors and prescribed officers are subject to a Fees reflect the directors’ role and committee memberships. A fee restraint-of-trade period of six months from date of termination. applies for any additional special meetings outside board and Senior management’s notice period was increased to three months committee meetings. Fees are reviewed by the committee annually as a retention mechanism. These contracts are regularly reviewed and require approval from shareholders at the AGM. Non-executive to ensure they remain aligned with governance and legislative directors do not participate in any of the company’s short or requirements. long-term incentive plans, and they are not employees of the company. TERMINATION POLICY Non-executive director fees for 2018 are tabulated in part 3 of this In the event of a termination, the company has the discretion to remuneration report. allow the director, prescribed officers and senior management to either work out their notice or to pay the guaranteed pay for the SHAREHOLDER ENGAGEMENT stipulated notice period in lieu of notice. We value our continued engagement with various stakeholders, and Guaranteed pay includes base salary and benefits. we endeavour to maintain our relationships with all in the hope that we will continue to receive their valued input. No performance bonus payment is made if a director, prescribed officer and senior management’s reason for termination is NON-BINDING ADVISORY VOTE resignation or dismissal. At the AGM on 12 April 2018, our 2017 remuneration report was endorsed by 99.2% of our shareholders. We believe this reflects Remco has the discretion to award a payment in cases where recognition of our ongoing commitment to engage with our specific agreed deliverables have been met. shareholders, and act on concerns where necessary. In the event Performance bonuses are paid to 'good leavers' on a pro rata basis. that the remuneration policy or implementation report is voted against by shareholders exercising 25% or more of the voting Unvested BSP awards are accelerated to termination date and paid rights, dissenting shareholders will be invited to engage with the in full if the reason for separation is retirement, death or ill-health company. The manner and timing of such engagement will be retirement. For resignation or dismissal, all unvested BSP shares provided, if necessary. will lapse. Unvested LTIP awards will continue to vest three years from grant date. Payments will be pro-rated if an employee’s reason for termination is retirement, death or ill-health retirement. Unvested LTIP awards will lapse if an employee resigns or is dismissed.
Anglo American Platinum Limited Integrated Report 2018 125 PILLARS OF VALUE: PEOPLE, COST
REMUNERATION REPORT CONTINUED
PART 3: IMPLEMENTATION OF POLICIES FOR THE with industry peers and to retain executive talent. This compares FINANCIAL YEAR with an average base salary increase of 8.13% for union-affiliated BASE SALARY ADJUSTMENTS staff (8.73% in 2017). The charts below reflect executive and The committee approved a 5.5% increase on the guaranteed management increases and increases of union-affiliated staff packages for senior management and base salary for executive against CPI (figures 4 and 5). directors and prescribed officers for 2018 to align more closely
Increases for executives and management against CPI Increases for union-affiliated employees against CPI (Figure 4) (Figure 5) % %
8 14
12 6 10
8 4 6
4 2 2 2 2
0 0
2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 CPI Executives Management and general staff CPI Unionised
2018 STI performance outcomes (cash and BSPs) Below Above Chief executive officer measures Weighting threshold Threshold Target target Maximum Company performance measures 70 Safety and health2 10 • Production4 20 • Cost/margin5 10 • Financial/returns 30 • Personal performance 30 • Overall performance 100 Fatalities1 (5) • Environment3 (3) • Key performance aspects 1 Includes reduction in fatalities. 2 Includes a reduction in LTIFR and TRCFR. 3 This includes environmental initiatives, ie reduced emissions, energy usage, water use and environmental incidents. 4 This includes equivalent refined production, sales volumes and operational improvement targets. 5 This includes measures of commercial savings, operating profit and achieving EPS targets for both Anglo American Platinum and Anglo American plc.
126 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
Below Above Finance director measures Weighting threshold Threshold Target target Maximum Company performance measures 55 Safety, health and environment 3 • Production1 12 • People2 6 • Financial 22 • Cost and capex3 8 • Socio-political 4 • Personal performance 45 • Overall performance 100 Key performance aspects 1 This includes equivalent refined production, sales volumes and operational improvement targets. 2 This includes square metres per operating employee, strengthening stakeholder relationships and equity targets. 3 This includes measures of commercial savings, operating profit and achieving EPS targets for Anglo American Platinum.
The key result area outcomes are summarised for the company, CEO and prescribed officers on page 22. The annual cash incentive and BSP award for the CEO, finance director and other prescribed officers are set out below. 2018 annual cash incentive payments and BSPs to be awarded in 2019 relating to performance in 2018 Annual Percentage Percentage cash of base BSPs of base incentive salary awarded salary Name R % R % Executive directors CI Griffith 7,156,435 84.00 10,734,652 126.00 I Botha 4,692,039 69.60 4,692,039 69.60 Prescribed officers DW Pelser 2,200,878 46.62 3,081,229 65.27 GA Humphries 2,024,333 46.62 2,834,066 65.27 GL Smith1 2,183,408 49.95 3,056,770 69.93 VP Pillay3 2,067,583 43.29 4,197,294 87.88 LN Mogaki 2,021,005 46.62 2,829,407 65.27 S Macheli-Mkhabela 1,770,424 43.29 2,478,594 60.61 Former employee I Pillay2 – 0.00 – 0.00 Grand total 24,116,105 33,904,051 1 GL Smith is within one year of retirement and will receive the cash value equivalent in line with policy as described on page 124. 2 I Pillay resigned effective 31 August 2018, therefore no payments are reflected. 3 VP Pillay retired on 31 December 2018 and will receive a cash value equivalent in lieu of a BSP award.
2018 LTIP OUTCOMES AND AWARDS The annual share awards for 2018 and performance outcomes for the 2016 share awards (which performance period ended on 31 December 2018) for the CEO, finance director and prescribed officers are set out on the following page.
Anglo American Platinum Limited Integrated Report 2018 127 PILLARS OF VALUE: PEOPLE, COST
REMUNERATION REPORT CONTINUED
LTIP awards made in 2018 Market Number face of LTIP value1 % of base Name awards R salary Executive directors CI Griffith 39,283 12,622,806 150.00 I Botha 26,225 8,426,879 125.00 Prescribed officers DW Pelser 14,570 4,681,778 100.00 VP Pillay 14,864 4,776,249 100.00 GL Smith 13,491 4,335,063 100.00 LN Mogaki 13,491 4,335,063 100.00 S Macheli-Mkhabela 12,727 4,089,567 100.00 GA Humphries 13,402 4,306,465 100.00 Former employee I Pillay2 12,727 4,089,567 100.00 Total 160,780 51,663,437 1 Market face value is based on the price at grant of R321.33. 2 I Pillay resigned effective 31 August 2018. LTIP grant date was 20 April 2018. LTIP performance metrics for 2018 The vesting of LTIP awards is based on achieving four stretching performance conditions measured over a three-year period. The table below summarises performance conditions applying to conditional share awards granted under the LTIP in 2018:
Performance measure and weighting Vesting schedule Performance period Total shareholder return (TSR) Vesting for this performance condition is on a sliding scale if the 1 January 2018 to (70%) TSR is benchmarked against the company achieved: 31 December 2020 returns of AngloGold Ashanti, African •• TSR equal to the index: 25% vests Rainbow Minerals, Sibanye-Stillwater, •• TSR 6% above the index: 100% vests. Harmony Gold Mining, Impala Platinum, Linear vesting occurs between these points. Northam Platinum and Lonmin (JSE) Return on capital employed (ROCE) Vesting for this performance condition is on a sliding scale if the 1 January 2018 to (10%) company achieved: 31 December 2020 •• ROCE equal to 15%: 25% vests •• ROCE equal to 25%: 100% vests Linear vesting occurs between these points. Cumulative attributable free cash Vesting for this performance condition is on a sliding scale if the 1 January 2018 to flow (10%) company achieved: 31 December 2020 •• Threshold of R4.3 billion: 25% vests •• Maximum attributable free cash flow of R4.9 billion: 100% vests Linear vesting occurs between these points. Safety and sustainable development Vesting is split as: 1 January 2018 to (10%) •• 5% being achieved through a ≥3% reduction in CO₂ emissions 31 December 2020 measured against 2016 actuals •• 5% being achieved by a reduction in fatalities cumulatively over three years measured as 50% in 2017, 25% in 2018 and 25% in 2019, with 2016 as a base. Vesting of LTIP awards (2016 – performance period ended 31 December 2018) The extent to which performance measures for the 2016 award were met is detailed below. These awards will vest on 26 April 2019 after a three-year vesting period has lapsed.
LTIP measures Below Threshold Target Above Weighting Achieved TSR (50%) • 50% 100.00% ROCE (50%) • 50% 88.90% Resulting vesting LTIP award 94.45%
128 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
TOTAL REMUNERATION OUTCOMES Total remuneration outcomes and mix between fixed and variable pay in 2018 for the CEO, finance director and prescribed officers are shown below. Chief executive officer (%) Finance director (%) Prescribed officers (%)
2 0 0 22 29 28 35 35 38
16 18 21 24 18 14
Guaranteed pay (including benefits) Cash incentive BSP bonus shares LTIP Other benefits
EXECUTIVE DIRECTORS AND PRESCRIBED OFFICERS Total remuneration and detail on outstanding and settled long-term incentives of executive directors and prescribed officers for 2017 and 2018 are reflected below. The format is aligned to the King IV recommended disclosure of a single total figure of remuneration. Total single figure of remuneration (income statement) Retirement BSP Total single Executive directors Base and medical Cash share LTIP figure of and prescribed Financial salary1 aid2 incentive award3,4 reflected5,6 Other7 remuneration officers year R R R R R R R Executive directors CI Griffith8 2018 8,519,565 1,495,610 7,156,435 10,734,652 15,832,366 1,076,719 44,815,347 2017 8,094,849 1,420,502 6,840,147 10,260,221 5,195,474 1,076,719 32,887,912 I Botha 2018 6,741,436 1,006,819 4,692,039 4,692,039 9,569,119 165,112 26,866,564 2017 6,390,000 951,735 4,447,440 4,447,440 – – 16,236,615 Prescribed officers DW Pelser 2018 4,720,887 770,096 2,200,878 3,081,229 5,316,477 – 16,089,567 2017 4,437,792 721,250 2,143,454 3,000,835 1,727,039 – 12,030,369 GA Humphries 2018 4,342,198 697,159 2,024,333 2,834,066 – – 9,897,756 2017 4,081,776 653,430 1,971,498 2,760,097 – – 9,466,800 GL Smith11 2018 4,371,187 684,511 2,183,408 3,056,770 4,922,664 – 15,218,540 2017 4,109,064 642,029 2,126,441 2,977,017 1,727,039 – 11,581,589 VP Pillay9, 10 2018 4,776,120 767,681 2,067,583 4,197,294 5,423,292 – 17,231,971 2017 4,527,132 724,667 2,030,419 4,071,529 1,902,651 – 13,256,398 LN Mogaki 2018 4,335,060 696,127 2,021,005 2,829,407 4,922,664 – 14,804,263 2017 4,109,064 657,159 2,126,441 2,977,017 1,727,039 – 11,596,719 S Macheli-Mkhabela 2018 4,089,684 660,425 1,770,424 2,478,594 4,643,758 – 13,642,885 2017 3,876,480 623,317 1,738,601 2,434,042 1,629,108 – 10,301,549 Former employees J Ndlovu13 2018 – – – – 5,739,421 – 5,739,421 2017 – – – – 2,013,462 – 2,013,462 I Pillay12 2018 2,726,456 464,975 – – – 1,222,815 4,414,246 2017 3,876,480 652,200 2,006,078 2,808,510 1,629,108 – 10,972,376 Notes 1 Base salary is the aggregate of basic salary plus an optional car allowance and provision towards a 13th cheque. 2 Benefits are reported as the sum of retirement and medical aid contributions. 3 The value of the 2017 BSP shares awarded on the basis of performance for the 2017 financial year is reflected in the 2017 single figure of remuneration. 4 The value of the 2018 BSP shares to be awarded on the basis of performance for the 2018 financial year is reflected in the 2018 single figure of remuneration. 5 The value of the 2015 LTIP with a performance period ending on 31 December 2017 is reflected in the 2017 single figure of remuneration at a 90-day VWAP of R368.16 per share. 6 The value of the 2016 LTIP with a performance period ending on 31 December 2018 is reflected in the 2018 single figure of remuneration at a 90-day VWAP of R539.47 per share. 7 Refers to the value of the use of a company vehicle for CI Griffith. 8 CI Griffith has an offshore GBP component to their remuneration which has been converted at monthly exchange rates and reported in ZAR. 9 Includes replacement awards for benefits lost on resignation from previous employer. 10 VP Pillay falls within the two year cut-off threshold as per the share award policy referenced in part 2, page 124. LTIP and BSP are awarded as cash payments, conditional on remaining in service until the effective retirement date. 11 GL Smith falls within the two year cut-off threshold as per the share award policy referenced in part 2, page 124 LTIP and BSP are awarded as cash payments, conditional on remaining in service until the effective retirement date. 12 I Pillay resigned effective 31 August 2018. He received a cash payment for performance deliverables met. 13 J Ndlovu was transferred to Anglo American Thermal Coal on 1 September 2016.
Anglo American Platinum Limited Integrated Report 2018 129 PILLARS OF VALUE: PEOPLE, COST
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Unvested long-term incentive awards and cash value of settled awards Cash value on Closing Forfeited Settled in Closing settlement fair value at Forfeited Settled Cash value Closing Opening in respect respect of number on during 31 Dec Granted in respect in respect Closing on settlement fair value at number on Granted of 2017 2017 31 Dec 2017 2017 during of 2018 of 2018 number on during 2018 31 Dec 2018 Incentive scheme Award year 1 Jan 2017 during 2017 vesting vesting 2017 R R 2018 vesting vesting 31 Dec 2018 R R CI Griffith LTIP 2014 22,600 – 15,090 7,510 – 2,733,633 – – – – – – – LTIP 2015 40,529 – – – 40,529 – 14,921,117 – 26,417 14,112 – 4,304,220 – LTIP 2016 31,072 – – – 31,072 – 11,439,437 – – – 31,072 – 10,057,447 LTIP 2017 – 33,436 – – 33,436 – 12,309,765 – – – 33,436 – 10,822,631 LTIP 2018 – – – – – – – 39,283 – – 39,283 – 12,715,200 BSP 2014 8,026 – – 8,026 – 2,927,243 – – – – – – – BSP 2015 17,531 – – – 17,531 – 6,454,196 – – 17,531 – 5,359,051 – BSP 2016 12,533 – – – 12,533 – 4,614,137 – – – 12,533 – 6,761,178 BSP 2017 – 18,732 – – 18,732 – 6,896,355 – – – 18,732 – 10,105,352 BSP 2018 – – – – – – – 28,178 – – 28,178 – 15,201,186
Total 132,291 52,168 15,090 15,536 153,833 5,660,875 56,635,005 67,461 26,417 31,643 163,234 9,663,272 65,662,994 I Botha LTIP 2014 – – – – – – – – – – – – – LTIP 2015 – – – – – – – – – – – – – LTIP 2016 18,780 – – – 18,780 – 2,407,464 – – – 18,780 – 6,078,748 LTIP 2017 22,119 – – – 22,119 – 2,835,500 – – – 22,119 – 7,159,522 LTIP 2018 – – – – – – – 26,225 – – 26,225 – 8,488,560 BSP 2014 – – – – – – – – – – – – – BSP 2015 – – – – – – – – – – – – – BSP 2016 6,511 – – – 6,511 – 834,664 – – – 6,511 – 3,512,489 BSP 2017 – 11,035 – – 11,035 – 1,414,609 – – – 11,035 – 5,953,051 BSP 2018 – – – – – – – 12,214 – – 12,214 – 6,589,087
Total 47,410 11,035 – – 58,445 – 7,492,238 38,439 – – 96,884 – 37,781,458 DW Pelser LTIP 2014 9,373 – 6,258 3,115 – 1,133,732 – – – – – – – LTIP 2015 13,472 – – – 13,472 – 4,959,838 – 8,781 4,691 – 1,430,740 – LTIP 2016 10,434 – – – 10,434 – 3,841,371 – – – 10,434 – 3,377,298 LTIP 2017 – 12,289 – – 12,289 – 4,524,306 – – – 12,289 – 3,977,728 LTIP 2018 – – – – – – – 8,241 – – 8,241 – 2,667,463 BSP 2014 3,595 – – 3,595 – 1,312,627 – – – – – – – BSP 2015 8,891 – – – 8,891 – 3,273,302 – – 8,891 – 2,717,890 – BSP 2016 5,450 – – – 5,450 – 2,006,467 – – – 5,450 – 2,940,112 BSP 2017 – 8,176 – – 8,176 – 3,010,068 – – – 8,176 – 4,410,707 BSP 2018 – – – – – – – 14,570 – – 14,570 – 7,860,078
Total 51,214 20,465 6,258 6,710 58,712 2,446,359 21,615,352 22,811 8,781 13,582 59,160 4,148,630 25,233,386
130 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
Unvested long-term incentive awards and cash value of settled awards Cash value on Closing Forfeited Settled in Closing settlement fair value at Forfeited Settled Cash value Closing Opening in respect respect of number on during 31 Dec Granted in respect in respect Closing on settlement fair value at number on Granted of 2017 2017 31 Dec 2017 2017 during of 2018 of 2018 number on during 2018 31 Dec 2018 Incentive scheme Award year 1 Jan 2017 during 2017 vesting vesting 2017 R R 2018 vesting vesting 31 Dec 2018 R R CI Griffith LTIP 2014 22,600 – 15,090 7,510 – 2,733,633 – – – – – – – LTIP 2015 40,529 – – – 40,529 – 14,921,117 – 26,417 14,112 – 4,304,220 – LTIP 2016 31,072 – – – 31,072 – 11,439,437 – – – 31,072 – 10,057,447 LTIP 2017 – 33,436 – – 33,436 – 12,309,765 – – – 33,436 – 10,822,631 LTIP 2018 – – – – – – – 39,283 – – 39,283 – 12,715,200 BSP 2014 8,026 – – 8,026 – 2,927,243 – – – – – – – BSP 2015 17,531 – – – 17,531 – 6,454,196 – – 17,531 – 5,359,051 – BSP 2016 12,533 – – – 12,533 – 4,614,137 – – – 12,533 – 6,761,178 BSP 2017 – 18,732 – – 18,732 – 6,896,355 – – – 18,732 – 10,105,352 BSP 2018 – – – – – – – 28,178 – – 28,178 – 15,201,186
Total 132,291 52,168 15,090 15,536 153,833 5,660,875 56,635,005 67,461 26,417 31,643 163,234 9,663,272 65,662,994 I Botha LTIP 2014 – – – – – – – – – – – – – LTIP 2015 – – – – – – – – – – – – – LTIP 2016 18,780 – – – 18,780 – 2,407,464 – – – 18,780 – 6,078,748 LTIP 2017 22,119 – – – 22,119 – 2,835,500 – – – 22,119 – 7,159,522 LTIP 2018 – – – – – – – 26,225 – – 26,225 – 8,488,560 BSP 2014 – – – – – – – – – – – – – BSP 2015 – – – – – – – – – – – – – BSP 2016 6,511 – – – 6,511 – 834,664 – – – 6,511 – 3,512,489 BSP 2017 – 11,035 – – 11,035 – 1,414,609 – – – 11,035 – 5,953,051 BSP 2018 – – – – – – – 12,214 – – 12,214 – 6,589,087
Total 47,410 11,035 – – 58,445 – 7,492,238 38,439 – – 96,884 – 37,781,458 DW Pelser LTIP 2014 9,373 – 6,258 3,115 – 1,133,732 – – – – – – – LTIP 2015 13,472 – – – 13,472 – 4,959,838 – 8,781 4,691 – 1,430,740 – LTIP 2016 10,434 – – – 10,434 – 3,841,371 – – – 10,434 – 3,377,298 LTIP 2017 – 12,289 – – 12,289 – 4,524,306 – – – 12,289 – 3,977,728 LTIP 2018 – – – – – – – 8,241 – – 8,241 – 2,667,463 BSP 2014 3,595 – – 3,595 – 1,312,627 – – – – – – – BSP 2015 8,891 – – – 8,891 – 3,273,302 – – 8,891 – 2,717,890 – BSP 2016 5,450 – – – 5,450 – 2,006,467 – – – 5,450 – 2,940,112 BSP 2017 – 8,176 – – 8,176 – 3,010,068 – – – 8,176 – 4,410,707 BSP 2018 – – – – – – – 14,570 – – 14,570 – 7,860,078
Total 51,214 20,465 6,258 6,710 58,712 2,446,359 21,615,352 22,811 8,781 13,582 59,160 4,148,630 25,233,386
Anglo American Platinum Limited Integrated Report 2018 131 PILLARS OF VALUE: PEOPLE, COST
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Cash value on Closing Forfeited Settled in Closing settlement fair value at Forfeited Settled Cash value Closing Opening in respect respect of number on during 31 Dec Granted in respect in respect Closing on settlement fair value at number on Granted of 2017 2017 31 Dec 2017 2017 during of 2018 of 2018 number on during 2018 31 Dec 2018 Incentive scheme Award year 1 Jan 2017 during 2017 vesting vesting 2017 R R 2018 vesting vesting 31 Dec 2018 R R VP Pillay LTIP 2014 10,326 – 6,895 3,431 – 1,249,004 – – – – – – – LTIP 2015 14,842 – – – 14,842 – 5,464,216 – 9,674 5,168 – 1,576,235 – LTIP 2016 10,644 – – – 10,644 – 3,918,685 – – – 10,644 – 3,445,271 LTIP 2017 – 12,536 – – 12,536 – 4,615,241 – – – 12,536 – 4,057,678 LTIP 2018 – – – – – – – 14,864 – – 14,864 – 4,811,209 BSP 2014 6,129 – – 6,129 – 2,235,369 – – – – – – – BSP 2015 13,221 – – – 13,221 – 4,867,430 – – 13,221 – 4,041,527 – BSP 2016 – – – – – – – – – – – – – BSP 2017 – – – – – – – – – – – – – BSP 2018 – – – – – – – – – – – – –
Total 55,162 12,536 6,895 9,560 51,243 3,484,373 18,865,572 14,864 9,674 18,389 38,044 5,617,763 12,314,158 GL Smith LTIP 2014 9,373 – 6,258 3,115 – 1,133,732 – – – – – – – LTIP 2015 13,472 – – – 13,472 – 4,959,838 – 8,781 4,691 – 1,430,740 – LTIP 2016 9,661 – – – 9,661 – 3,556,784 – – – 9,661 – 3,127,092 LTIP 2017 – 11,379 – – 11,379 – 4,189,281 – – – 11,379 – 3,683,177 LTIP 2018 – – – – – – – 13,491 – – 13,491 – 4,366,794 BSP 2014 2,661 – – 2,661 – 970,520 – – – – – – – BSP 2015 7,224 – – – 7,224 – 2,659,581 – – 7,224 – 2,208,305 – BSP 2016 5,801 – – – 5,801 – 2,135,690 – – – 5,801 – 3,129,465 BSP 2017 – – – – – – – – – – – – – BSP 2018 – – – – – – – – – – – – –
Total 48,192 11,379 6,258 5,776 47,537 2,104,252 17,501,175 13,491 8,781 11,915 40,332 3,639,044 14,306,529 I Pillay LTIP 2014 8,842 – 5,904 2,938 – 1,069,504 – – – – – – – LTIP 2015 12,709 – – – 12,709 – 4,678,933 – 8,284 4,425 – 1,349,709 – LTIP 2016 9,114 – – – 9,114 – 3,355,401 – 9,114 – – – – LTIP 2017 – 10,735 – – 10,735 – 3,952,187 – 10,735 – – – – LTIP 2018 – – – – – – – 12,727 12,727 – – – – BSP 2014 3,171 – – 3,171 – 1,156,527 – – – – – – – BSP 2015 5,679 – – – 5,679 – 2,090,775 – – 5,679 – 1,736,014 – BSP 2016 4,743 – – – 4,743 – 1,746,178 – 4,743 – – – – BSP 2017 – 7,618 – – 7,618 – 2,804,635 – 7,618 – – – – BSP 2018 – – – – – – – 7,713 7,713 – – – –
Total 44,258 18,353 5,904 6,109 50,598 2,226,031 18,628,110 20,440 60,934 10,104 – 3,085,722 –
132 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
Cash value on Closing Forfeited Settled in Closing settlement fair value at Forfeited Settled Cash value Closing Opening in respect respect of number on during 31 Dec Granted in respect in respect Closing on settlement fair value at number on Granted of 2017 2017 31 Dec 2017 2017 during of 2018 of 2018 number on during 2018 31 Dec 2018 Incentive scheme Award year 1 Jan 2017 during 2017 vesting vesting 2017 R R 2018 vesting vesting 31 Dec 2018 R R VP Pillay LTIP 2014 10,326 – 6,895 3,431 – 1,249,004 – – – – – – – LTIP 2015 14,842 – – – 14,842 – 5,464,216 – 9,674 5,168 – 1,576,235 – LTIP 2016 10,644 – – – 10,644 – 3,918,685 – – – 10,644 – 3,445,271 LTIP 2017 – 12,536 – – 12,536 – 4,615,241 – – – 12,536 – 4,057,678 LTIP 2018 – – – – – – – 14,864 – – 14,864 – 4,811,209 BSP 2014 6,129 – – 6,129 – 2,235,369 – – – – – – – BSP 2015 13,221 – – – 13,221 – 4,867,430 – – 13,221 – 4,041,527 – BSP 2016 – – – – – – – – – – – – – BSP 2017 – – – – – – – – – – – – – BSP 2018 – – – – – – – – – – – – –
Total 55,162 12,536 6,895 9,560 51,243 3,484,373 18,865,572 14,864 9,674 18,389 38,044 5,617,763 12,314,158 GL Smith LTIP 2014 9,373 – 6,258 3,115 – 1,133,732 – – – – – – – LTIP 2015 13,472 – – – 13,472 – 4,959,838 – 8,781 4,691 – 1,430,740 – LTIP 2016 9,661 – – – 9,661 – 3,556,784 – – – 9,661 – 3,127,092 LTIP 2017 – 11,379 – – 11,379 – 4,189,281 – – – 11,379 – 3,683,177 LTIP 2018 – – – – – – – 13,491 – – 13,491 – 4,366,794 BSP 2014 2,661 – – 2,661 – 970,520 – – – – – – – BSP 2015 7,224 – – – 7,224 – 2,659,581 – – 7,224 – 2,208,305 – BSP 2016 5,801 – – – 5,801 – 2,135,690 – – – 5,801 – 3,129,465 BSP 2017 – – – – – – – – – – – – – BSP 2018 – – – – – – – – – – – – –
Total 48,192 11,379 6,258 5,776 47,537 2,104,252 17,501,175 13,491 8,781 11,915 40,332 3,639,044 14,306,529 I Pillay LTIP 2014 8,842 – 5,904 2,938 – 1,069,504 – – – – – – – LTIP 2015 12,709 – – – 12,709 – 4,678,933 – 8,284 4,425 – 1,349,709 – LTIP 2016 9,114 – – – 9,114 – 3,355,401 – 9,114 – – – – LTIP 2017 – 10,735 – – 10,735 – 3,952,187 – 10,735 – – – – LTIP 2018 – – – – – – – 12,727 12,727 – – – – BSP 2014 3,171 – – 3,171 – 1,156,527 – – – – – – – BSP 2015 5,679 – – – 5,679 – 2,090,775 – – 5,679 – 1,736,014 – BSP 2016 4,743 – – – 4,743 – 1,746,178 – 4,743 – – – – BSP 2017 – 7,618 – – 7,618 – 2,804,635 – 7,618 – – – – BSP 2018 – – – – – – – 7,713 7,713 – – – –
Total 44,258 18,353 5,904 6,109 50,598 2,226,031 18,628,110 20,440 60,934 10,104 – 3,085,722 –
Anglo American Platinum Limited Integrated Report 2018 133 PILLARS OF VALUE: PEOPLE, COST
REMUNERATION REPORT CONTINUED
Cash value on Closing Forfeited Settled in Closing settlement fair value at Forfeited Settled Cash value Closing Opening in respect respect of number on during 31 Dec Granted in respect in respect Closing on settlement fair value at number on Granted of 2017 2017 31 Dec 2017 2017 during of 2018 of 2018 number on during 2018 31 Dec 2018 Incentive scheme Award year 1 Jan 2017 during 2017 vesting vesting 2017 R R 2018 vesting vesting 31 Dec 2018 R R LN Mogaki LTIP 2014 9,373 – 6,258 3,115 – 1,133,732 – – – – – – – LTIP 2015 13,472 – – – 13,472 – 4,959,838 – 8,781 4,691 – 1,430,740 – LTIP 2016 9,661 – – – 9,661 – 3,556,784 – – – 9,661 – 3,127,092 LTIP 2017 – 11,379 – – 11,379 – 4,189,281 – – – 11,379 – 3,683,177 LTIP 2018 – – – – – – – 13,491 – – 13,491 – 4,366,794 BSP 2014 2,811 – – 2,811 – 1,025,228 – – – – – – – BSP 2015 6,669 – – – 6,669 – 2,455,252 – – 6,669 – 2,038,647 – BSP 2016 5,414 – – – 5,414 – 1,993,213 – – – 5,414 – 2,920,691 BSP 2017 – 6,561 – – 6,561 – 2,415,491 – – – 6,561 – 3,539,463 BSP 2018 – – – – – – – 8,176 – – 8,176 – 4,410,707
Total 47,400 17,940 6,258 5,926 53,156 2,158,960 19,569,860 21,667 8,781 11,360 54,682 3,469,386 22,047,923 S Macheli-Mhkabela LTIP 2014 – – – – – – – – – – – – – LTIP 2015 12,709 – – – 12,709 – 4,678,933 – 8,284 4,425 – 1,349,709 – LTIP 2016 9,114 – – – 9,114 – 3,355,401 – – – 9,114 – 2,950,038 LTIP 2017 – 10,735 – – 10,735 – 3,952,187 – – – 10,735 – 3,474,726 LTIP 2018 – – – – – – – 12,727 – – 12,727 – 4,119,501 BSP 2014 – – – – – – – – – – – – – BSP 2015 3,146 – – – 3,146 – 1,158,228 – – 3,146 – 961,701 – BSP 2016 4,743 – – – 4,743 – 1,746,178 – – – 4,743 – 2,558,706 BSP 2017 – 5,237 – – 5,237 – 1,928,049 – – – 5,237 – 2,825,204 BSP 2018 – – – – – – – 6,685 – – 6,685 – 3,606,357
Total 29,712 15,972 – – 45,684 – 16,818,976 19,412 8,284 7,571 49,241 2,311,409 19,534,532 GA Humphries LTIP 2014 – – – – – – – – – – – – – LTIP 2015 – – – – – – – – – – – – – LTIP 2016 – – – – – – – – – – – – – LTIP 2017 – 11,303 – – 11,303 – 1,448,965 – – – 11,303 – 3,658,578 LTIP 2018 – – – – – – – 13,402 – – 13,402 – 4,337,986 BSP 2014 1,791 – – 1,791 – 653,214 – – – – – – – BSP 2015 3,436 – – – 3,436 – 1,264,994 – – 3,436 – 1,050,351 – BSP 2016 2,466 – – – 2,466 – 907,880 – – – 2,466 – 1,330,333 BSP 2017 – 3,415 – – 3,415 – 1,257,263 – – – 3,415 – 1,842,290 BSP 2018 – – – – – – – 7,580 – – 7,580 – 4,089,183
Total 7,693 14,718 – 1,791 20,620 653,214 4,879,103 20,982 – 3,436 38,166 1,050,351 15,258,369
1 The 2014 LTIP and BSP awarded on: 2014/04/16 at R491.35 per share , which vests on 2017/04/16 with LTIP vesting of 33.23% at R364.00 and BSP at R364.72 per share. 2 The 2015 LTIP and BSP awarded on: 2015/04/16 at R296.00 per share , which vests on 2018/04/16. The estimated vesting for LTIP in 2017 was 60% and in 2018 the LTIP will vest at 34.82%. 3 The 2016 LTIP and BSP awarded on: 2016/04/13 at R399.00 per share , which vests on 2019/04/13. The estimated vesting for LTIP in 2017 was 60% and in 2018 LTIP vesting was estimated at 60%. 4 The 2017 LTIP and BSP awarded on: 2017/04/13 at R367.15 per share , which vests on 2020/04/13. The estimated vesting for LTIP in 2017 was 60% and in 2018 LTIP vesting was estimated at 60%.
134 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
Cash value on Closing Forfeited Settled in Closing settlement fair value at Forfeited Settled Cash value Closing Opening in respect respect of number on during 31 Dec Granted in respect in respect Closing on settlement fair value at number on Granted of 2017 2017 31 Dec 2017 2017 during of 2018 of 2018 number on during 2018 31 Dec 2018 Incentive scheme Award year 1 Jan 2017 during 2017 vesting vesting 2017 R R 2018 vesting vesting 31 Dec 2018 R R LN Mogaki LTIP 2014 9,373 – 6,258 3,115 – 1,133,732 – – – – – – – LTIP 2015 13,472 – – – 13,472 – 4,959,838 – 8,781 4,691 – 1,430,740 – LTIP 2016 9,661 – – – 9,661 – 3,556,784 – – – 9,661 – 3,127,092 LTIP 2017 – 11,379 – – 11,379 – 4,189,281 – – – 11,379 – 3,683,177 LTIP 2018 – – – – – – – 13,491 – – 13,491 – 4,366,794 BSP 2014 2,811 – – 2,811 – 1,025,228 – – – – – – – BSP 2015 6,669 – – – 6,669 – 2,455,252 – – 6,669 – 2,038,647 – BSP 2016 5,414 – – – 5,414 – 1,993,213 – – – 5,414 – 2,920,691 BSP 2017 – 6,561 – – 6,561 – 2,415,491 – – – 6,561 – 3,539,463 BSP 2018 – – – – – – – 8,176 – – 8,176 – 4,410,707
Total 47,400 17,940 6,258 5,926 53,156 2,158,960 19,569,860 21,667 8,781 11,360 54,682 3,469,386 22,047,923 S Macheli-Mhkabela LTIP 2014 – – – – – – – – – – – – – LTIP 2015 12,709 – – – 12,709 – 4,678,933 – 8,284 4,425 – 1,349,709 – LTIP 2016 9,114 – – – 9,114 – 3,355,401 – – – 9,114 – 2,950,038 LTIP 2017 – 10,735 – – 10,735 – 3,952,187 – – – 10,735 – 3,474,726 LTIP 2018 – – – – – – – 12,727 – – 12,727 – 4,119,501 BSP 2014 – – – – – – – – – – – – – BSP 2015 3,146 – – – 3,146 – 1,158,228 – – 3,146 – 961,701 – BSP 2016 4,743 – – – 4,743 – 1,746,178 – – – 4,743 – 2,558,706 BSP 2017 – 5,237 – – 5,237 – 1,928,049 – – – 5,237 – 2,825,204 BSP 2018 – – – – – – – 6,685 – – 6,685 – 3,606,357
Total 29,712 15,972 – – 45,684 – 16,818,976 19,412 8,284 7,571 49,241 2,311,409 19,534,532 GA Humphries LTIP 2014 – – – – – – – – – – – – – LTIP 2015 – – – – – – – – – – – – – LTIP 2016 – – – – – – – – – – – – – LTIP 2017 – 11,303 – – 11,303 – 1,448,965 – – – 11,303 – 3,658,578 LTIP 2018 – – – – – – – 13,402 – – 13,402 – 4,337,986 BSP 2014 1,791 – – 1,791 – 653,214 – – – – – – – BSP 2015 3,436 – – – 3,436 – 1,264,994 – – 3,436 – 1,050,351 – BSP 2016 2,466 – – – 2,466 – 907,880 – – – 2,466 – 1,330,333 BSP 2017 – 3,415 – – 3,415 – 1,257,263 – – – 3,415 – 1,842,290 BSP 2018 – – – – – – – 7,580 – – 7,580 – 4,089,183
Total 7,693 14,718 – 1,791 20,620 653,214 4,879,103 20,982 – 3,436 38,166 1,050,351 15,258,369
5 The 2018 LTIP and BSP awarded on: 2018/04/20 at R321.33 per share , which vests on 2021/04/20. The estimated vesting for LTIP in 2017 was 60% and in 2018 LTIP vesting was estimated at 60%. 6 The 90-day volume-weighted average price (VWAP), for determining the fair value of unvested awards at 31 December 2017 is R368.16 per share. 7 The 90-day VWAP, for determining the fair value of unvested awards at 31 December 2018 is R539.47 per share. 8 The 2015 LTIP and BSP were settled at R305.00 and R305.69 per share, respectively. 9 The value of the 2016 LTIP and BSP is estimated at a 90-day VWAP price of R539.47 per share, as date of transaction only occurs in April 2019.
Anglo American Platinum Limited Integrated Report 2018 135 PILLARS OF VALUE: PEOPLE, COST
REMUNERATION REPORT CONTINUED
NON-EXECUTIVE DIRECTORS’ FEES Increase in non-executive director fees Fees payable to non-executive directors are annually benchmarked to industry and size-based comparators. There is a significant disparity between non-executive director fees and competing industry rates, resulting in non-executive director fees significantly lagging the market median for each committee of the board. As communicated to shareholders at the 2016 AGM, the committee has incorporated a three-year catch-up strategy to align current fees to market levels. For 2018, non-executive director fees will be adjusted in line with inflation, with an additional adjustment capped at 20% to move closer to the market median. Please refer to special resolution 1 in the notice for the proposed adjustments to be approved by shareholders at the 2019 AGM. The tables below reflect non-executive directors’ fees for 2017 and 2018. Non-executive directors’ fees Ad hoc Financial Directors' committee Committee Total year fees meeting fees remuneration Current R R R R R M Cutifani3,8 2018 353,859 23,000 110,404 487,263 2017 292,635 – 100,449 393,084 RMW Dunne1,2,3,4,5,6 2018 353,859 69,000 805,462 1,228,321 2017 292,635 18,880 718,064 1,029,579 V Moosa2,3,4,5,6 2018 1,591,244 46,000 704,213 2,341,457 2017 1,444,944 18,880 641,943 2,105,767 NP Mageza1,4 2018 353,859 69,000 257,517 680,376 2017 292,635 – 231,574 524,209 NT Moholi2,4,5,6 2018 353,859 46,000 612,674 1,012,533 2017 292,635 18,880 551,074 862,589 D Naidoo1,2,4 2018 353,859 69,000 368,396 791,255 2017 292,635 18,880 336,238 647,753 A O'Neill8 2018 353,859 – – 353,859 2017 292,635 18,880 – 311,515 AH Sangqu5,7,11 2018 353,859 23,000 107,483 484,342 2017 292,635 18,880 98,376 409,891 JM Vice1,4,6 2018 353,859 69,000 369,614 792,473 2017 292,635 18,880 331,331 642,846 S Pearce8 2018 353,859 23,000 – 376,859 R Medori8,10 2017 292,635 – – 292,635 D Emmett5,6 2018 – – 298,693 298,693 2017 – – 267,948 267,948 Total 2018 4,775,975 437,000 3,634,456 8,847,431 1 Audit committee. 2 Remuneration committee. 3 Nomination committee. 4 Corporate governance committee. 5 Social, ethics and transformation committee. 6 Safety and sustainable development committee. 7 Directors’ fees ceded to Anglo Operations Limited, a wholly owned subsidiary of Anglo American plc. 8 Directors’ fees ceded to Anglo American Services UK Limited, a wholly owned subsidiary of Anglo American plc. 9 D Emmett is not a director but a committee member only. 10 R Medori resigned effective 31 December 2017. 11 AH Sangqu resigned effective 23 October 2018.
136 Anglo American Platinum Limited Integrated Report 2018 GOVERNANCE
NON-BINDING ADVISORY VOTE Shareholders are requested to cast a non-binding advisory vote on part 3 of this remuneration report.
APPROVAL This remuneration report was approved by the board of directors of the company on 14 February 2019.
Nombulelo Moholi Chairperson Johannesburg 14 February 2019
Anglo American Platinum Limited Integrated Report 2018 137 ANALYSIS OF SHAREHOLDERS
An analysis of the share register at year end showed the following: Ordinary shares
2018 2017 % % Number of of issued Number of of issued shareholders capital shareholders capital
Size of shareholding 1 – 1,000 10,026 0.48 10,708 0.55 1,001 – 10,000 1,014 1.26 1,039 1.20 10,001 – 100,000 303 3.67 297 3.58 100,001 – 1,000,000 85 7.27 75 8.08 1,000,001 and over 11 87.32 10 86.59 11,439 100.00 12,129 100.00 Category of shareholder Companies 256 77.73 259 77.75 Individuals 9,009 0.74 9,600 0.83 Pension and provident funds 282 4.62 357 5.50 Insurance companies 59 0.71 76 0.60 Bank, nominee and finance companies 399 10.24 358 8.85 Trust funds and investment companies 1,320 5.82 1,340 6.37 Other corporate bodies 114 0.14 139 0.10 11,439 100.00 12,129 100.00 Shareholder spread Public shareholders 11,436 22.42 12,126 22.38 Non-public shareholders Directors and associates 2 0.01 2 –* Persons interested, directly or indirectly, in 10% or more 1 77.57 1 77.62 11,439 100.00 12,129 100.00 * Less than 0.01%. Major shareholder According to the company’s share register at year end, the following shareholders held shares equal to or in excess of 5% of the issued ordinary share capital of the company:
Number of Number of shares % shares %
Anglo American South Africa Investments Proprietary Limited 208,417,151 77.56 208,417,151 77.62
Geographical analysis of shareholders Resident shareholders held 240,491,873 shares (89.5%) (2017: 244,492,531: 91.05%) and non-resident shareholders held 28,211,697 shares (10.5%) (2017: 24,026,872: 8.95%) of the company’s issued ordinary share capital of 268,703,570 shares at 31 December 2018 (2017: 268,519,403). The treasury shares of 978,316 (2017: 1,162,483), held in terms of the bonus share plan and other schemes, have been excluded from the shareholder analysis. The shareholder details above include the shares issued by the company in respect of the community economic empowerment transaction.
138 Anglo American Platinum Limited Integrated Report 2018 SHAREHOLDERS’ DIARY GOVERNANCE
FINANCIAL YEAR END 31 December
ANNUAL GENERAL MEETING 17 April 2019 at 10:00
REPORTS
Announcement of interim results 23 July 2019
Integrated report for the full year to 31 December March
Suite of annual reports March
DIVIDENDS
Dividend for 2018 declared 18 February 2019
Last date to trade for 2018 dividend 5 March 2019
Share trading ex-dividend from 6 March 2019
Record date 8 March 2019
Payment date 11 March 2019
Anglo American Platinum Limited Integrated Report 2018 139 ADMINISTRATION
DIRECTORS SPONSOR Executive directors Merrill Lynch South Africa Proprietary Limited C Griffith (chief executive officer) The Place, 1 Sandton Drive, Sandton, 2196 I Botha (finance director) PO Box 651987, Benmore 2010 Independent non-executive directors Telephone +27 (0) 11 305 5822 RMW Dunne (British) [email protected] NP Mageza NT Moholi REGISTRAR D Naidoo Computershare Investor Services Proprietary Limited JM Vice Rosebank Towers, 15 Biermann Avenue Rosebank Non-executive directors 2196 M Cutifani (Australian) PO Box 61051 S Pearce (Australian) Marshalltown, 2107 AM O’Neill (British) N Mbazima Telephone +27 (0) 11 370 5000 Facsimile +27 (0) 11 688 5200 Alternate directors PG Whitcutt (alternate director to S Pearce) AUDITOR Deloitte & Touche COMPANY SECRETARY Buildings 1 and 2, Deloitte Place Elizna Viljoen The Woodlands, Woodlands Drive [email protected] Woodmead Telephone +27 (0) 11 638 3425 Sandton Facsimile +27 (0) 11 373 5111 2196
FINANCIAL, ADMINISTRATIVE, TECHNICAL ADVISERS INVESTOR RELATIONS Anglo Operations Proprietary Limited Emma Chapman [email protected] CORPORATE AND DIVISIONAL OFFICE, Telephone +27 (0) 11 373 6239 REGISTERED OFFICE AND BUSINESS AND POSTAL ADDRESSES OF THE COMPANY SECRETARY LEAD COMPETENT PERSON AND ADMINISTRATIVE ADVISERS Gordon Smith 55 Marshall Street, Johannesburg, 2001 [email protected] PO Box 62179, Marshalltown, 2107 Telephone +27 (0) 11 373 6334 Telephone +27 (0) 11 373 6111 Facsimile +27 (0) 11 373 5111 FRAUD LINE – SPEAKUP +27 (0) 11 834 2379 Anonymous whistleblower facility 0800 230 570 (South Africa) [email protected]
HUMAN RESOURCES-RELATED QUERIES Job opportunities: www.angloamericanplatinum.com/careers/ job-opportunities
Bursaries, email: [email protected] Career information: www.angloamericanplatinum.com/ careers/working-at-anglo-american-platinum
140 Anglo American Platinum Limited Integrated Report 2018
2018 REPORT INTEGRATED LIMITED PLATINUM AMERICAN ANGLO
Anglo American Platinum Limited Incorporated in the Republic of South Africa Date of incorporation: 13 July 1946 Registration number: 1946/022452/06 JSE code: AMS – ISIN: ZAE000013181 www.angloamericanplatinum.com A member of the Anglo American plc group www.angloamerican.com
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